Federal Reserve Chairman Jerome Powell said Tuesday there are some positive indicators pointing to a stabilization or modest economic rebound amid the coronavirus pandemic but that “significant uncertainty” remains about prospects for longer-term recovery.
“Some businesses are opening up, while stimulus checks and unemployment benefits are supporting household incomes and spending,” Mr. Powell said in opening remarks kicking off two days of testimony to Congress. “As a result, employment moved higher in May.”
Mr. Powell spoke as the stock market surged Tuesday on better-than-expected retail sales numbers for May.
“That said, the levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery,” Mr. Powell said.
He said until the public is confident that the coronavirus is contained, a “full recovery” is unlikely.
Mr. Powell also said the coronavirus pandemic is presenting “acute risks” to small businesses.
“If a small or medium-sized business becomes insolvent because the economy recovers too slowly, we lose more than just that business,” he said. “These businesses are the heart of our economy and often embody the work of generations.”
Mr. Powell had warned last week that the recovery from the coronavirus-related shutdowns could be long and slow and that many jobs lost during the pandemic might never come back.
As he has in recent weeks and months, Mr. Powell said on Tuesday that the Fed is committed to using its “full range of tools” to support the economy.
The Fed has already lowered its target interest rate to near zero, and central bankers signaled last week they would plan to keep rates at or near zero through 2022.
Mr. Powell also said a long-awaited “main street” lending program is up and running. The Fed this week announced that it was seeking input on potentially expanding the program to include nonprofit groups.
The Fed on Monday also announced more details on how it plans to purchase corporate bonds in an effort to expand credit for large employers.