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Treasury Sec. Mnuchin and Fed Chairman Powell Receive Rare
Joint Performance Review
May 24, 2020
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The Senate Banking Committee questioned the pair via videoconference on how the $2.2 trillion relief package, aka the CARES Act, played out in its first public update. 

• There’s a Lincoln Tunnel-sized stretch before the light. Powell and Mnuchin both signaled more severe job losses ahead before the economy begins to claw back. 
• About $550 million of the small business loans that went to public companies has been returned, meaning a majority of publicly traded companies that received funds kept them. 
• Sen. Elizabeth Warren called for...can you guess? CEOs to be held “personally accountable” if their companies illegitimately access CARES Act funds. 
• Powell said the focus should be on local economies, and that the Fed might even buy municipal debt. 
• Mnuchin was more concerned that prolonged shutdowns could cause “permanent damage” to the economy.
• Daily global CO2 emissions fell 17% by early April over last year’s average, according to a new study published in the journal Nature Climate Change. (not part of the review but relevant)

 
The review was also a brainstorming session. Congress is working on a fourth economic relief package.

Figure 1: Global COVID-10 Protection

Source: Morningbrew

They seemed to be less than accountable for the Congressional Budget Office projection of GDP dropping 38% in the second quarter, which is better than the Atlanta Fed’s dire projection of -42%. No help for the 26 million unemployed Americans. In addition, the CBO sees the federal budget deficit swelling to $2.2 trillion in fiscal 2020 and $600b in 2021 as the “decline in economic activity has been so rapid and so recent that the depth of the downturn is still uncertain, and the data on spending are preliminary and incomplete.” The levels equate to about 11% of nominal GDP in FY2020 and 3% in FY 2021.