Recovery Elusive As Coronavirus Spreads

Government programs continue to offer relief to businesses across the country. But officials caution economic recovery hinges on controlling the coronavirus outbreak as case numbers rise in 18 states

Testifying before Congress yesterday on the heels of the long-awaited Main Street Lending program’s launch, Federal Reserve Chairman Jerome Powell struck a cautious tone. “Significant uncertainty remains about the timing and strength of the recovery,” Powell said. “Much of that uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it.” 

Until the public is confident that the disease is contained,” he said, “a full recovery is unlikely.”

The Main Street Lending program allows businesses with up to 15,000 employees or up to $5 billion in annual revenue to register for up to $600 billion total in loans.

The Fed also announced it will buy debt from large corporations to lower their borrowing costs in the market.

With the Main Street program now underway, the Fed still has several hundred billion dollars from the Exchange Stabilization Fund to use. Moving forward, we’ll see the Fed use this money for existing facilities but likely look for creative ways to deploy it to severely impacted parts of the economy.

Chairman Powell and Treasury Secretary Steven Mnuchin have both noted that the hospitality and tourism industries have been hardest hit and could take the longest to recover. So watch for future recovery efforts to target these industries.