Powell Says Fed Monitoring State, Local Gov Risk

Q: On state + Local aid, can you give detail on the damage lack of it will have on the economy? Esp w muni facility set to expire?

• A: State and local gov'ts provide critical services. Decision to provide fiscal support to them is entirely in the hands of Congress. The picture is mixed: states that have exposure to tourism/energy, it's negative; other states have done well.
• Concerns that we had at the very beginning of massive shortfalls and cutbacks have not yet occurred. It's different state-to-state. The real concern is that they're very large employers and employment there has dropped 1.3mn, significantly more than lost their jobs in GFC. Significant part of that is in education, so when schools reopen many will go back. But it's still a concern, we're monitoring it carefully. It's a mixed picture, but up to Congress on fiscal aspect.