The US economy risks suffering “permanent damage” the longer the lockdown to contain the COVID-19 pandemic drags on, US Treasury Secretary Steven Mnuchin said Tuesday.
American families and businesses are suffering amid the nationwide shutdowns, Mnuchin told a Senate committee, but reopening the economy will need to be done with caution.
“We’re conscious of the health issues and we want to do this in a safe way,” he said of efforts to restart the economy.
Mnuchin said the government is willing to take risks with the funds it has put up to help the economy withstand the unprecedented hit from the coronavirus pandemic.
Mnuchin also said he sees more job losses in the next month before the economy starts to improve in the third and fourth quarters.
He appeared remotely before the Senate Banking Committee in an unusual joint appearance with Federal Reserve Chair Jerome Powell to review how officials are using the over $2 trillion in support Congress approved in late March in the so-called CARES act.
A broad shutdown of the country in mid-March to contain the spread of COVID-19, the respiratory illness caused by the novel coronavirus, has resulted in the worst unemployment since the Great Depression.
Most economists and business leaders say the lifting of restrictions on business activity won’t likely be enough to spur significant hiring in the weeks and months ahead. Surveys suggest that consumers will remain wary of shopping, traveling, eating out or congregating in large groups until a vaccine is available or they’re otherwise confident they can avoid infection.
Government data show more than 38 million jobs have been destroyed, at least temporarily, by the lockdowns, and some legislators have complained that aid programs have been drained mostly by large corporations rather than the small businesses they were intended to help.
Democrats in the House of Representatives approved another $3 trillion aid program, but Republicans senators argued that it would be prudent to wait to give time for existing relief measures to make their way through the economy.
The US central bank has slashed interest rates to near zero and set up a network of programs to keep financial markets functioning during the pandemic. It has also established precedent-setting lending facilities for companies and its first-ever corporate bond purchases.
While more than 30 million unemployment claims have been processed since March, workers are reporting delays of weeks or months in getting checks, with others saying they are locked out of claiming benefits.