(Reuters) – The U.S. economic recovery will slow down if unemployed Americans and struggling businesses do not receive more assistance, Minneapolis Federal Reserve President Neel Kashkari said on Thursday.
Without further stimulus, “we will end up having a much slower – what I would call a grinding – recovery,” Kashkari said during a virtual discussion organized by New York University Stern Center for Global Economy and Business.
Lawmakers have yet to reach a deal for further fiscal stimulus, and President Donald Trump has alternated between calling off the negotiations and pushing for larger benefits. While discussions drag on, Kashkari and other Fed policymakers are drawing attention to the consequences of not rolling out more aid.
Thousands more businesses could fail if they do not get more support, a trend that can also hurt property owners and lenders, Kashkari added.
And the financial pain felt by jobless consumers who are struggling to pay their bills could also spill over to other parts of the economy, Kashkari said.
The Fed is limited in what it can do to help struggling businesses and consumers since it does not have the authority to issue grants or send cash directly to households.
“If you can’t pay your bills, more quantitative easing is a poor substitute for extended unemployment insurance,” Kashkari said. “Only Congress has the ability to get that direct fiscal aid to the small businesses and to the Americans who have lost their jobs and who are facing real hardship.”
(Reporting by Jonnelle Marte in New York; Editing by Chris Reese and Matthew Lewis)