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The stalled efforts by White House officials and Congressional Democrats is “an unfortunate development” for the U.S. economy, said Chicago Fed President Charles Evans on Sunday.
Fiscal policy has been unbelievably important during the initial phase of the shutdown of the economy, and it continues to be important as “we’ve not control over the virus spread,” Evans said, in an interview on CBS’s “Face the Nation.”
“Another support package is really, in my opinion, important,” he said.
Fed officials have taken aggressive action to battle the coronvirus. They have slashed interest rates to zero, bought trillions in Treasurys and mortgage-backed securities and set up almost a dozen lending programs to support financial markets, midsized businesses, and but corporate and municipal bonds.
Still Fed officials admit public health efforts and spending by Congress are more important to the health of the economy.
“The path of the economy will depend significantly on the course of the virus,” the Fed said in its latest policy statement.
Read: What Congress decides on jobless claims will influence outlook, Evans says
The Chicago Fed president said he didn’t think another shutdown would be adopted so it was important to provide funds for testing, contract tracing and isolating people to try to get a hold of the virus.
“What we need is public confidence so that people feel good about going back to work, they feel safe they can go out to retail establishments and enjoy leisure and hospitality that put people back to work,” Evans said.
Evans said that state and local governments need assistance. The most pessimistic scenarios facing the economy involve local governments having to cut jobs, he said. An extension of the Payroll Protection Program would also be helpful, he said.
These two provisions are not included in the president’s executive orders.
