WASHINGTON: The risks of ongoing business failures in the United States"remain considerable" even as the economy emerges from the coronavirus pandemic, the Federal Reserve said on Friday in its semi-annual monetary policy report to Congress.
After presenting his own summary of where the economy stands he will field questions from lawmakers that are likely to focus on how much more help the economy needs from the federal government to reach the point where ongoing COVID-19 vaccinations make it safe to resume normal commerce. Those federal payments, including one-time checks to families, increased unemployment insurance, and loans to small businesses, led to faster-than-expected economic growth and less-than-anticipated financial stress among households and the banks that hold their mortgages and credit card loans.But while banks and household balance sheets remain in reasonable shape, the Fed's reference to business debt highlights the potential economic hangover still to come after a historically trying year.
The report also noted that the borrowing and spending used in some countries to fight the pandemic had made their financial systems"more vulnerable" than before, and the situation may be getting worse. Stress in some emerging market nations, the report warned, could spill over"and produce additional strains for the US financial system and economic activity."