The Fed chief’s testimony came a week after the central bank projected the economy would ultimately contract by a staggering 6.5 percent this year, despite regaining some ground in the second half of the year, and conflicted with the narrative from Trump, who trumpeted positive economic data.
“Wow! May retail sales show biggest one-month increase of ALL TIME, up 17.7%,” the president tweeted Tuesday morning. “Far bigger than projected. Looks like a BIG DAY FOR THE STOCK MARKET, AND JOBS!”
The previous day Trump boosted the theory that the country is experiencing a quick rebound, quoting Chetan Ahya, chief economist at Morgan Stanley: “We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action.”
The unemployment rate did tick down unexpectedly last month, and other economic indicators have come in more positive than predicted. But Powell said this news is partially a result of Congress‘ willingness to spend record amounts of money to rescue the economy and gently suggested that lawmakers might need to do more.
Some key emergency economic relief programs are winding down: Small businesses that borrowed hundreds of billions of dollars under the government’s Paycheck Protection Program have to rehire workers by June 30 to be eligible for loan forgiveness, while enhanced unemployment benefits run out on July 31.
“With an easing of restrictions on mobility and commerce and the extension of federal loans and grants, some businesses are opening up, while stimulus checks and unemployment benefits are supporting household incomes and spending,” Powell told the Banking Committee.