Powell Says Fed Actions Unlocked $2 Trillion to Support Economy

Federal Reserve Chairman Jerome Powell said the central bank’s actions to backstop a range of credit markets after the coronavirus convulsed Wall Street this past spring had unlocked almost $2 trillion to support businesses, cities and states.

In testimony prepared for delivery at a congressional hearing Tuesday, Mr. Powell said the Fed’s unprecedented steps to stabilize financial markets had largely succeeded in restoring the flow of credit from private lenders.

Treasury Secretary Steven Mnuchin on Nov. 19 told Mr. Powell that he would not grant extensions for five lending programs that have backstopped markets for corporate and municipal debt and to purchase loans made to small businesses and nonprofits when those programs expire on Dec. 31.

Mr. Powell didn’t elaborate in his testimony, released on Monday afternoon, about the central bank’s disagreement with Mr. Mnuchin’s decision. The Fed had earlier said it would have preferred the lending programs had stayed open because the pandemic emergency hasn’t receded.

Mr. Mnuchin is slated to testify alongside Mr. Powell at Tuesday’s hearing and didn’t address the conflict in his prepared testimony.

Source: WSJ

Global Economy Faces Hard Winter Despite Covid-19 Vaccine Hopes

Economists have long used letters of the alphabet like V and U to describe economic recoveries. But the coronavirus downturn is so different from past recessions that economists are coming up with new shapes to describe the potential recovery. WSJ explains. Illustration: Jacob Reynolds

The prospect of coronavirus vaccines on the horizon has boosted hopes of an end to the pandemic-wrought downturn—but first the global economy could face a long and difficult winter.

Government restrictions and consumers’ fear of infection will continue to weigh on the global economy well into next year, even as vaccine developments offer hope of an end to the pandemic, the Organization for Economic Cooperation and Development said Tuesday.

When the world’s economy does come back, China will emerge as the big winner, according to the research body, accounting for as much as one-third of next year’s recovery, as Western countries slowly shake off the effects of 2020’s record-setting contractions.

Releasing new forecasts since a number of pharmaceutical companies said their vaccines were highly effective in recent tests, the OECD said governments must continue to provide support to their economies to ensure a speedy return to pre-pandemic levels of activity.

“It’s not like we get a vaccine and in a month everything returns to normal,” said Laurence Boone, the OECD’s chief economist.

Source: The Wall Street journal

Jeff Bezos, Elon Musk among US billionaires getting richer during coronavirus pandemic

The COVID-19 pandemic has triggered an economic crisis of a magnitude not seen since the Great Depression. In the early months of the pandemic, as local businesses across the country closed, tens of millions of Americans lost their job. Now, more than half a year later, more than 11 million Americans remain unemployed and many shops and restaurants will never reopen. Here is a look at American businesses that might not survive coronavirus. 

The recession ushered in by the novel coronavirus has not meant economic catastrophe for everyone, however. In fact, in the months since the virus reached the United States, many of the nation’s wealthiest citizens have actually profited handsomely. Over a roughly seven-month period starting in mid-March – a week after President Donald Trump declared a national emergency – America’s 614 billionaires grew their net worth by a collective $931 billion.

Source: usatoday

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