The U.S. economic recovery “will require following medical experts’ guidance, including using masks and social-distancing measures,” Jerome Powell, chair of the U.S. Federal Reserve, told the annual meeting of the National Association for Business Economics on 6 October.
An out-of-control virus pandemic would “more significantly limit economic activity, not to mention the tragic effects on lives and well-being,” he warned.
The pace of the country’s economic rebound seems to be slowing, with 661,000 new jobs added in September, fewer than expected, compared with more than a million jobs each month from May through August. The number of temporary layoffs becoming permanent also is on the rise.
“Weakness feeds on weakness,” Powell warned, as he repeated his call for additional federal stimulus dollars to see the economy through the next several months.
Fed Split
While there is general agreement to pump more cheap money into the failing systems, there is some disagreement among the Fed Banksters on how to manage interest rates, according to minutes of their 15 September meeting.
An initial plan called for three conditions to be met before raising rates: inflation must exceed 2 percent per year, there must be evidence that it will continue to exceed 2 percent, and the labor market must be meeting the Fed’s full-employment targets, which were not specified.
Robert Kaplan, president of the Dallas Fed bank, wanted looser guidelines. Minneapolis Fed president Neel Kashkarian argued for a bolder and less restrictive approach.
The disagreement could foreshadow similar clashes over details of the central bank’s plan to buy corporate loans and other assets.
The bankers foresee a quicker rebound in the jobs market and a stronger economic recovery, but only if another round of federal stimulus is unleashed.
“If future fiscal support was significantly smaller or arrived significantly later than expected, the pace of recovery could be slower than anticipated,” the meeting minutes said.
TREND FORECAST: There will be no “pace of recovery” in the near future. As interest rates move beyond 2 percent, we forecast as the “Greatest Depression” worsens, regardless of where rates are over the next two years, more cheap money will be pumped into the system.
