The hearing will mark the the second time both men have appeared together before Congress this week to discuss their agencies’ roles in handling the economic fallout caused by Covid-19.
Since March, the Fed and Treasury have introduced a litany of programs aimed at lending money to businesses struggling for liquidity as Americans stay at home. Their efforts include the Main Street Lending Program aimed at companies with fewer than 15,000 employees, the Paycheck Protection Program and direct stimulus checks to U.S. workers.
Though Powell said earlier in the week that the U.S. still looks like it’s in an economic rebound, the Fed chief warned Tuesday that there is still a risk of deceleration in U.S. economic activity without additional fiscal stimulus from Congress as Americans opt to stay away from crowded venues like restaurants or salons.
“I would say many, most, [forecasters] assume some fiscal action. Fiscal action underlies many, many current forecasts,” Powell told lawmakers on Tuesday.
He added that Americans could deplete their savings as they look for employment in the months ahead if Congress doesn’t act to reenact unemployment benefits or direct stimulus payments.
“The risk is that, over time, they go through those savings, they haven’t been able to find employment yet because it’s going to take a while to get 11 million people back to work, so their spending will decline,” he added. Their ability to stay in their homes will decline. So, the economy will begin to feel those negative effects at some time.”