Powell testifies before Congress today.
We already know what he’s going to say though, as his testimony is pre-released. Not that that will stop the market from acting shocked when they hear it later (because who reads?).
“Many economic indicators show marked improvement,” Powell said Monday in the text of testimony he’s scheduled to deliver before the House Financial Services Committee on Tuesday.
“Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain,” he says.
Powell will appear alongside Treasury Secretary Steven Mnuchin, a quarterly exercise mandated by the Cares Act passed by Congress in March and which appropriated about $2 trillion to help speed the U.S. recovery.
The pair are likely to face questions about their use of Cares Act funds and about what else should still be done.
“The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government.”
Well, good luck with that!
According to the Congressional Budget Office our national debt is on a path to be double the size of our entire economy by 2050, but that’s based on it being 200% of GDP while GDP also doubles in size. At the moment, GDP is shrinking and debt is up 25% of our GDP this year alone.
At that pace, we’ll be laughing at Japan’s 300% debt-to-GDP ratio in no time.
It’s doubtful Congress will bring that up as they are, even now, talking about spending $1.5 trillion to $2 trillion more this year, which would push our national debt up close to $6 trillion for this year alone, that would be 1/3 of our GDP in a single year and a $29 trillion total, up 26% for the year.
Second wave begins
We can’t blame this all on Trump as there was a virus but we can blame most of it on Trump for his completely inept handling of it and, as Powell states, we are certainly not out of the woods yet.
We are officially crossing 200,000 American deaths from Covid today, with 6,858,212 Americans infected with 52,070 new cases yesterday.
I’m worried that Powell, once again, will not say enough to save the market. The UK is going back on lockdown today and other countries are likely to follow as Wave 2 of the coronavirus begins to hit the Western World.
As Zero Hedge puts it, 2020 has been a “nightmare year” for America and the economic fallout is just getting started.
That says it all!