Coronavirus: Americans to get aid within 3 weeks, says Mnuchin as Fed's Powell says US may be in recession

In this file photo taken on March 3, 2020, US Federal Reserve Chairman Jerome Powell speaks at a press briefing after the announcement that the Reserve will cut interest rates.
In this file photo taken on March 3, 2020, US Federal Reserve Chairman Jerome Powell speaks at a press briefing after the announcement that the Reserve will cut interest rates.PHOTO: AFP

WASHINGTON (REUTERS, BLOOMBERG) - Americans should receive direct deposits for financial aid within three weeks once the coronavirus economic relief Bill is signed into law, US Treasury Secretary Steven Mnuchin said yesterday (Thurs), adding that record jobless claims announced on the same day were “not relevant”. 

Mr Mnuchin, in an interview on CNBC, said he hoped companies would ultimately rehire workers and pointed to other industries such as grocers that were hiring.

He added that he hoped the Bill, which has been passed by the US Senate, would be taken up quickly by the House of Representatives. Unemployment benefit filings surged to a record 3.28 million last week as businesses shuttered and laid off workers as part of efforts to slow the spread of the coronavirus. 

Mr Mnuchin said the US$2.2 trillion (S$3.15 trillion) aid package the Senate passed late on Wednesday will provide assistance to laid-off workers through unemployment insurance and cash sent directly to families. 

Mr Mnuchin also said he talks as many as 30 times a day with Federal Reserve Chairman Jerome Powell to coordinate the US government’s response to the outbreak. “We both have the same objective: to protect American workers and companies.”

In a separate interview on NBC’s Today Show, Mr Powell said the US “may well be in recession”, but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen.

“We are not experts in pandemic... We would tend to listen to the experts. Dr Fauci said something like the virus is going to set the timetable, and that sounds right to me,” Mr Powell said, in reference to Dr Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, who is on the White House’s coronavirus task force.

“The first order of business will be to get the spread of the virus under control and then resume economic activity.” 

The US central bank chief’s remarks are a contrast to the urging by some of President Donald Trump’s advisers for a faster reopening. 

The President himself has said he wants the economy to be “roaring” by Easter, in a little over two weeks. 

The Fed officials who have spoken to the issue, now including Mr Powell, have taken a more sombre approach, focusing on the need to first control the virus, then restore confidence among workers and consumers that it is safe to go back to business. 

Mr Powell’s remarks on Thursday were an unusual acknowledgement by a Fed chair that the economy may be contracting even before data has confirmed it. 

But the situation is so unusual – and upcoming reports expected to show such large jumps in joblessness in lost output – that policymakers have become unusually blunt, and focused on making the contraction a short one. 

The aim of the trillions of dollars in lending and bond purchases the Fed has authorised over the past two weeks is precisely to let an otherwise healthy economy pause long enough to keep people safe, Mr Powell said, before what could be a strong rebound later in the year. 

“The sooner we get through this period and get the virus under control, the sooner the recovery can come... We know that economic activity will decline probably substantially in the second quarter, but I think many expect and I would expect economic activity to resume and move back up in the second half of the year,” Mr Powell said. 

The Fed chair’s rare appearance on a nationally broadcast morning show comes as officials worldwide try to cope with both a health crisis and the deep economic fallout from it. 

Later on Thursday morning, the US Labour Department will release data on claims for unemployment insurance, which are expected to skyrocket due to “social distancing” and mandated shutdowns of many businesses across the country.