Treasury Secretary Steve Mnuchin on Tuesday warned that continued lockdowns meant to slow the spread of coronavirus could scar the U.S. economy.
“There is the risk of permanent damage” if the economy stays shut, Mnuchin told lawmakers at a hearing of the Senate Banking Committee. “We’re conscious of the health issues and we want to do this in a safe way.”
Mnuchin was joined by Federal Reserve chairman Jerome Powell to answer lawmakers’ questions on the use of funds provided in economic relief legislation passed in March and April. Both officials have warned that the U.S. economy faces a challenging period ahead.
“I think the jobs numbers will be worse before they get better,” Mnuchin said. Job losses already total upwards of 36 million, or about 20 percent of the workforce, with an unemployment rate of about 14 percent.
“This is the biggest shock we’ve seen in living memory,” Powell told the senators. Powell suggested that the federal government may need to increase economic aid even further if local governments are unable to balance their budgets: “We have the evidence of the global financial crisis and the years afterward, where state and local government layoffs and lack of hiring did weigh on economic growth.”
Congress and President Trump have already signed off on economic relief packages approaching $3 trillion. Democrats and some Republicans, notably Missouri senator Josh Hawley, have pushed for additional federal aid to Americans laid off from work during the coronavirus pandemic.
However, Senate Republican leadership has cautioned against additional measures until more data can be gathered on the effectiveness of previous legislation.
“We need to assess what we’ve already done, take a look at what worked and what didn’t work, and we’ll discuss the way forward in the next couple of weeks,” Majority Leader Mitch McConnell (R., Ky.) told reporters on Tuesday.