MNI POLICY: Evans- Jobless Benefit Lapse is Big Needless Risk

Congress is taking a "serious and unnecessary risk" by failing to extend jobless benefits and there are already signs poorer households have slashed expenditures since the top-up lapsed at the end of July, Chicago Fed President Charles Evans said Thursday.

The comments amplify remarks Wednesday at an MNI event where he said policy makers must guard against a K-shaped recovery where further divisions between rich and poor are created. The reductions in jobless benefits, the Payroll Protection Program, and restrictions on some layoffs "will test the true resiliency of the U.S. economy," he said Thursday.

Chances of another major fiscal package are dimming as the presidential election nears and lawmakers gear up for a fight over a new Supreme Court justice. The lack of aid threatens to undo what Fed officials have said is a stronger-than-expected comeback in the months following the Covid-19 pandemic.

"We are committed to using our full range of tools until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals," Evans said. "The longer the pandemic and recession go on, the more difficult it will be to achieve an equitable and inclusive recovery."