Jerome Powell: ‘Reasonable probability’ that Congress, Fed will need to do more for recovery

Federal Reserve Chairman Jerome Powell on Tuesday said it’s a reasonable proposition that Congress will have to pass more rescue legislation to support a U.S. economy trying to bounce back from the coronavirus-related lockdowns.

Congress has authorized roughly $3 trillion in recent months, and lawmakers are weighing what to include in a potential next phase.

“A question we all will have to answer over time is, is it enough?” Mr. Powell told the Senate Banking Committee. “I would say there’s a reasonable probability that more will be needed, both from you and from the Fed.”

He said already-authorized programs are “really having a very positive effect now, and we should see a lot more of that going forward.”

Mr. Powell said long-term, he’s confident the U.S. economy will recover.

“Long run, don’t sell the U.S. economy short. Long run, I am confident that we will have a full recovery,” he said. “The fact is we’ve had the largest economic shock in living memory, and the economy’s going to recover from that, but we just have to be a little patient with it.”

A major point of contention for the next round is whether to extend a $600-per-week boost in federal unemployment benefits that is set to expire at the end of July.

Democrats say the money is needed to support millions of Americans who have lost jobs, but Republicans say the benefits are structured in a way that makes it more lucrative for people to take the money rather than return to work.

Mr. Powell said he wouldn’t “presume” to offer specific recommendations but suggested that some continued support on that front will likely be needed.

“I think there are going to be an awful lot of unemployed people for some time,” he said. “I think something will likely wind up being appropriate there.”

Mr. Powell also said racial gaps in how Americans are doing is a “longer-run weakness in our economy.”

But he took a pass on a question from Sen. Robert Menendez, New Jersey Democrat, on whether the economy would be better off if Congress took action to try to mitigate racial “inequalities” in relief legislation.

“Fiscal policy is really for you,” Mr. Powell said. “I do think what you’ve done so far has been by far the largest of any fiscal response, and you’re starting to see that in some of the economic numbers we’re seeing.”