Inventory costs dropped sharply Tuesday after President Trump known as on his representatives to cease negotiating with Democrats on one other coronavirus stimulus bundle till after the November election.
NOEL KING, HOST:
This is one factor we all know for sure. Federal Reserve Chair Jerome Powell says extra federal reduction is important to maintain the U.S. financial system from faltering throughout the pandemic. Will we get it, although? We do not know. Yesterday, President Trump stated he was calling off all talks with Congress on one other help bundle. He desires to attend, he stated, till after the election. Inventory indices promptly fell off a cliff. And later, the president tweeted that Congress ought to instantly approve a deal for federal funds. NPR’s chief economics correspondent Scott Horsley is with us to assist determine a few of this out. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning.
KING: What’s President Trump doing?
HORSLEY: (Laughter) Good query. , his announcement yesterday that he was ending talks was actually a head-scratcher. I imply, Trump is campaigning on a powerful financial system. You’d suppose he’d wish to do every little thing he might to place cash in individuals’s pockets earlier than they vote. In truth, over the weekend, whereas he was hospitalized at Walter Reed, Trump tweeted in all caps that the nation desires and desires stimulus. And it was Trump’s personal treasury secretary who was in negotiations with the Home speaker, Nancy Pelosi. So if the president needed a deal, he might have reduce one after which put strain on Senate Republicans to go alongside. As an alternative, he known as a halt to negotiations within the afternoon, saying he’d maintain off till after the election, solely to backtrack hours later, tweeting late final night time that he would approve some cherrypicked items of the help bundle.
KING: Monetary markets had clearly been betting that extra federal assist was on the way in which. After which yesterday, when the president made his first assertion, the response was not nice.
HORSLEY: No, the Dow tumbled about 375 factors. Now, futures markets in a single day counsel a few of that could possibly be made up this morning as traders attempt to parse the president’s late-night tweets. However you recognize, Noel, no matter occurs on Wall Road, Predominant Road companies are actually struggling right here. The Nationwide Retail Federation put out an announcement yesterday afternoon saying the pandemic is not over and neither is the financial disaster it created. The Impartial Restaurant Coalition warned its members can not wait 5 – 6 extra weeks for assist. And so they warned that if Congress and the president stroll away from negotiations, much more neighborhood eating places will exit of enterprise.
KING: The Fed chair, Jerome Powell, doesn’t have interaction in hyperbole, which is why individuals are inclined to take him fairly significantly. What’s he arguing about stimulus?
HORSLEY: The Fed chairman has been saying for months now that further reduction will in all probability be wanted. And yesterday, he instructed the Nationwide Affiliation for Enterprise Economics that although the nation has bounced again quicker than many individuals anticipated, the restoration nonetheless has a protracted approach to go. Bear in mind, nearly half of the 22 million jobs that had been misplaced again in March and April haven’t been changed but. And Powell says it could possibly be a very long time earlier than the individuals who work in jobs that require a number of face-to-face contact are in a position to return to work.
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JEROME POWELL: The suitable factor to do and the sensible factor to do for the long term is to proceed to assist these individuals as they return to their outdated jobs or discover new jobs in numerous sectors of the financial system.
HORSLEY: Powell says the extraordinary reduction measures that Congress handed early within the pandemic actually did assist. However with out extra help, he says, the restoration can be slower and extra painful than it must be.
KING: And what does that seem like in the long run? What’s he nervous about?
HORSLEY: He is nervous that the longer the restoration takes, the extra hardship individuals will really feel, the broader the ache will get unfold and the extra long-lasting the financial scars may be. And Trump himself appeared to endorse that view final night. He retweeted a narrative about Powell’s feedback with approval. However, you recognize, if the president actually desires Congress to comply with the Fed chairman’s recommendation, he’ll should do greater than tweet about it.
KING: NPR’s Scott Horsley. Thanks, Scott.
HORSLEY: You are welcome.
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