Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, two of the top fiscal experts in the United States, told the Senate on Wednesday that the U.S. economy has recovered from the coronavirus disease 2019 (Covid-19) pandemic faster than expected.
Despite the positive outlook, though, the two warned full recovery is still a ways off.
Wednesday’s hearing was the second half of congressional testimony from the two top officials that’s focused on the federal response to the coronavirus crisis. They testified in the House on Tuesday.
“The recovery is far from complete,” Powell said. “So at the Fed, we will continue to provide the economy the support that it needs for as long as it takes.”
Yellen offered her support for economic stimulus packages, such as the one signed by President Joe Biden last week. She said federal aid should be withdrawn gradually as the economy and employment recovers.
“Longer-run, we do have to raise revenue to support permanent spending that we want to do,” she said.
“While unemployment remains high, it’s important to provide the supplementary relief.”
Yellen also addressed the pandemic’s impact on the U.S. housing market.
“One in 10 homeowners with a mortgage are behind on their payments and almost one in five renters are behind on their rent,” Yellen wrote in her opening statement. “There are 22 million people who say they don’t have enough food to eat.”
“I [have] worried that the Covid economy was going to keep hurting millions of people now and haunt them long after the health emergency was over. With the passage of the [American] Rescue Plan, I am confident that people will reach the other side of this pandemic with the foundations of their lives intact.”
She also said banks appear to be healthy enough to begin paying dividends again and repurchasing stock.
In his testimony, Powell acknowledged that the first major aid package, the CARES Act, was instrumental in kick-starting the U.S. economic recovery a year ago.
“Congress provided by far the fastest and largest response to any postwar economic downturn, offering fiscal support for households, businesses, healthcare providers and state and local governments,” he said in his opening statement.
“Today, the situation is much improved. While the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action — from Congress and the Federal Reserve, from across government and cities and towns, and from individuals, communities, and the private sector.”
The U.S. economy has rebounded significantly since the early weeks and months of the pandemic. Millions of Americans have returned to the workforce, the stock markets have largely returned to their pre-pandemic levels and the effectiveness of multiple vaccines are allowing more businesses to reopen.
Powell said, however, there’s still a ways to go.
“We welcome this progress, but will not lose sight of the millions of Americans who are still hurting,” he said. “Including lower-wage workers in the services sector, African Americans, Hispanics and other minority groups that have been especially hard hit.
“The recovery is far from complete,” he added. “we will continue to provide the economy the support that it needs for as long as it takes.”
Powell succeeded Yellen as head of the Federal Reserve in 2018. Yellen took over the Treasury about a week after Biden took office in January.