Drop in unemployment shows hope for economy
Low interest rates help, but Congress must provide focused approach
Millions of Americans remain unemployed as the nation struggles to get an economy stalled by COVID-19 back in gear. Some success has been seen; by June 13, the U.S. unemployment rate was 13.3%, much better than the 14.7% a month before.
Still, we have a long way to go. Prior to the coronavirus epidemic, the unemployment rate was a sparkling 4.4%.
Some of those lost jobs will never be regained. Employers were forced to put new efficiencies in place during the past couple of months. Many companies will find they don’t need payrolls as big as they had earlier this year.
In addition, some businesses — especially small ones lacking the financial reserves of larger companies — may have closed their doors forever during the epidemic. Even some larger contributors to the economy are in trouble, because of shifts in buying patterns.
Congress approved nearly $3 trillion in financial aid to individuals, businesses and organizations, in order to buffer the effects of COVID-19 shutdowns. More assistance may be coming.
Another source of aid is the Federal Reserve, which controls the interest rates we pay on borrowed money. The Fed already had been keeping rates low, and is slicing them even more because of the coronavirus.
In a report to Congress, the central bank’s officials wrote last week that they are “committed to using (the) full range of tools to support the U.S. economy in this challenging time.”
Good. The Fed certainly can help — but its aid has restrictions. The Fed can only control interest rates and lending rules in general. It cannot target lower rates to certain businesses or organizations.
Lower rates for consumers should encourage more purchasing of goods and services. That should help every business, large and small. But only Congress can provide the laser-focus approach needed to get financial assistance to those who need it most. Lawmakers should remember that when and if they negotiate a massive new relief bill.