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On Wednesday, December 1, 2021, at 10:00 a.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a virtual hearing entitled, “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response."
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Witnesses for this one-panel hearing will be:
• The Honorable Janet L. Yellen, U.S. Department of the Treasury
• The Honorable Jerome Powell, Chair, Board of Governors of the Federal Reserve System
Overview
In response to the COVID-19 pandemic, Congress enacted a series of laws, including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27, 2020. The CARES Act directs the Secretary of the Department of the Treasury (Treasury) and the Chair of the Board of Governors of the Federal Reserve System (Fed) to testify quarterly before the Committee regarding their obligations and transactions made under the Act. This is the Committee’s sixth hearing fulfilling this statutory requirement.
The COVID-19 Pandemic, Recession, and Economic Outlook
The COVID-19 pandemic has resulted in over 773,000 deaths and 47.9 million cases in the United States, and over 5.1 million deaths and 258 million cases worldwide. More than 74% of individuals 5 years or older in the U.S. have received at least one vaccination shot. COVID-19 triggered the deepest economic downturn the U.S. has experienced since the Great Depression. The peak unemployment rate in April 2020 was 14.8%, the highest monthly rate ever recorded by the U.S. Bureau of Labor Statistics (BLS); the 2020 second quarter annualized decline in real gross domestic product (GDP) was 31.2%, the highest single-quarter decline recorded by the Bureau of Economic Analysis (BEA).
Policies enacted at the beginning of the pandemic have benefited the economy in the short term. The Congressional Budget Office (CBO) projected the policies enacted in early 2020, including the CARES Act, would increase real GDP by 4.7% and 3.1% in 2020 and 2021, respectively, compared to if Congress had not acted.7 Congress passed additional pandemic-related legislation, most notably the Consolidated Appropriations Act, 2021 (CAA),8 which included $900 billion in pandemic relief, and the American Rescue Plan Act of 2021 (ARPA), which provided $1.9 trillion in pandemic relief and economic stimulus measures.9 While real GDP fell by 3.4% for 2020, it has risen in the first three quarters of 2021, surpassing pre-pandemic levels in the second quarter. According to the Organisation for Economic Cooperation and Development (OECD), the ARPA alone could raise U.S. output by 3-4% between the second quarter of 2021 and the first quarter of 2022.11 The U.S. is the only major economy measured by OECD that has seen an increase in real GDP per capita, and the Fed has predicted overall real growth of 5.9% in the U.S. in 2021.
With respect to the labor market, jobless claims for the week ending November 20, 2021 totaled 199,000, the lowest weekly total since 1969. The unemployment rate in October 2021 was down to 4.6%, with 5.6 million jobs created since February 2021, but the unemployment rate remains 1.1% higher than February 2020 levels. The unemployment rates for Black (7.9%) and Latinx (5.9%) workers remain higher than the national average, and comparatively higher than February 2020 unemployment rates, which were 6% and 4.4% for Black and Latinx workers, respectively. Meanwhile, inflation has been elevated since March 2021, measuring a 12-month increase in September 2021 of 4.4% as according to the Personal Consumption Expenditures (PCE) Price Index. Fed Chair Powell has pointed to supply chain disruptions and bottlenecks contributing to near-term inflation, saying that, “[T]he drivers of higher inflation have been predominantly connected to the dislocations caused by the pandemic, specifically the effects on supply and demand from the shutdown, the uneven reopening, and the ongoing effects of the virus itself.” In September, the Fed projected that PCE inflation will decrease to 2.2% in 2022, roughly matching the Fed’s stated long-run inflation target of 2%....
Hearing page: https://financialservices.house.gov/events/eventsingle.aspx?EventID=408703
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