Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell faced questioning today by the Senate Banking Committee, about the state of the U.S. economy and government efforts to support businesses, states and American citizens.
Secretary Mnuchin offered an optimistic outlook for the country’s rebound: “We expect economic conditions to improve in the third and fourth quarters,” he said in an opening statement.
However, when pressed by Sen. Elizabeth Warren about America’s historic unemployment rate during the coronavirus pandemic, he acknowledged that signs of an uptick are still months away.
“I think the job numbers will get worse before they get better. June will be a difficult quarter,” he said.
According to the Labor Department, seasonally adjusted jobless claims for the week ended May 9 hit 2.98 million. That brought the two-month count of initial claims to more than 36 million.
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Powell was more circumspect in his predictions, saying that the success of current reopenings among states would be an indicator of how well the U.S. economy will bounce back. “We’re going to see quickly how the reopening goes,” he said, adding “Right now, we don’t know. We’ve never done this before — no one has done this before.”
In regard to supporting U.S. businesses, both Mnuchin and Powell touted several new lending facilities coming online, which are supported by the CARES Act and are meant to provide liquidity to the markets. Among them is the Main Street Business Lending Program, aimed at small and medium-sized companies.
Powell said that program is expected to be up and running by the end of this month, or a few days into June.
According to the Fed, companies can qualify for loans through the Main Street program if they have fewer than 15,000 employees or 2019 revenues under $5 billion. Loans issued under the program would have a four-year maturity, and principal and interest payments on the loans will be deferred for one year.
The CARES Act provided the Treasury Department with authority for $454 billion in support for Federal Reserve lending programs. “We have committed up to $195 billion in credit support under the CARES Act. We have the remaining $259 billion to create or expand programs as needed,” said Mnuchin.