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"It’s so fundamental": Fed chair says path of the economy depends on path of coronavirus

The Federal Reserve sees a slowing pace of economic growth after the coronavirus outbreak began to worsen in June, chairman Jerome Powell told reporters on Wednesday.

Why it matters: Powell's comments came as theFed took its most forceful tone yet to emphasize that the fate of the economy is inextricably linked to the course of the virus — alluding to the fact there is no trade-off between the economy and the pandemic, and that economic recovery is all but impossible if the virus isn't contained.


What he's saying: "Social distancing measures and faster reopening actually go together. They're not in competition with each other," Powell said.

  • The Fed added to its closely watched policy statement released Wednesday that the "path of the economy will depend significantly on the course of the virus," with Powell stressing at his press conference: "It's so fundamental."
  • Though the Fed noted in its policy statement that "economic activity and employment have picked up somewhat in recent months," Powell noted that high frequency data — credit and debit card spending and measures of job growth — are pointing to a slower growth pace as virus cases spike.

The backdrop: As the pandemic worsens, Congress is trying to hash out another stimulus package. Powell emphasized that the Fed will continue doing all it can to support the economy, but more action on the fiscal side will be necessary.

  • He repeated his oft-said line that the Fed only has "lending powers, not spending powers" like Congress and that spending is needed to buoy the economy.
  • Powell said that the economy will need "continued support" from monetary and fiscal policy during the most severe downturn of our lifetimes.

Worth noting: Powell wouldn't comment directly on Republican lawmakers' assertions that continuing the $600 enhanced unemployment benefits "disincentivize" jobless Americans from returning to work — a sticking point among members of Congress (though it's a claim many economists refute).

  • What Powell did say is that workers in industries that involve people gathering together — like restaurants or hotels — will find it hard to return to work.
  • "There won't be enough jobs for them ... and those people are going to need support if they are to be able to pay their bills," Powell said.

Other key takeaways:

  • Dollar swap lines: The Fed said the dollar swap lines established at the onset of the pandemic to ensure U.S. dollars kept flowing, including to other central banks around the world, would be extended through March.
  • Fed's role in inequality: Amid a reckoning over systemic racism in the U.S., Powell said that the critical issue of fixing social inequality "falls to fiscal policy and other policies."
  • Future interest rate hikes are not a consideration among members of the Fed: "We're not even thinking about thinking about thinking about raising rates," Powell said. (For those keeping score, Powell added one more "thinking about" since the last Fed presser in June.)

Naftali Bennett: How Israel's new PM plans to handle relations with Biden

New Israeli Prime Minister Naftali Bennett is signaling he intends to move cautiously at first on issues like Iran and the Israeli-Palestinian conflict, an approach that will suit the Biden administration just fine.

Why it matters: Bennett is aiming to avoid an early confrontation with the U.S., and his fragile and ideologically diverse government will have a hard time taking any groundbreaking steps on foreign policy in the first place.

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Biden: Consequences for Russia would be "devastating" if opposition leader Navalny dies

President Biden said he warned Russian President Vladimir Putin during Wednesday's summit that if jailed Russian opposition leader Alexei Navalny dies in prison, the consequences "would be devastating for Russia."

Why it matters: Although the White House had previously warned the Russian government over Navalny's imprisonment, Biden personally delivered the message to Putin on Wednesday.

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Republican Leader Kevin McCarthy will support Juneteenth bill

House Republican Leader Kevin McCarthy will support a bill to make Juneteenth a federal holiday when it comes to the floor later Wednesday, his office tells Axios.

Why it matters: The House is slated to pass a bill making June 19 — Juneteenth — a federal holiday that memorializes when the last enslaved people in Texas learned about their freedom under the Emancipation Proclamation.

  • It will then go to President Biden for his signature just days before the occasion and one day after the Senate passed the bill unanimously.

Biden says he raised human rights issues in Putin summit

President Biden said he raised issues including nuclear arms control, cybersecurity, election interference and violations of human rights in Russia in his meeting with Vladimir Putin in Geneva on Tuesday.

What he's saying: "My agenda is not against Russia or anybody else. It's for the American people," Biden said at a press conference following the summit, which was shorter than expected.

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Putin calls talks with Biden "constructive," says ambassadors will return to posts

Russian President Vladimir Putin of Russia said Wednesday that his summit with President Biden was "constructive," and that the countries had agreed their ambassadors would imminently return to their posts in Moscow and Washington.

What he's saying: "Many of our joint positions are divergent but nevertheless I think both sides manifested a determination to try and understand each other and try and converge our positions," Putin told reporters at a press conference immediately following the meetings.

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Southwest heat wave intensifies, 40 million likely to see 100-degree temperatures

A punishing and long-enduring heat wave is intensifying in parts of the West and Southwest, with heat warnings and advisories in effect across seven states Wednesday. The heat will not relent until late in the weekend.

Threat level: In the coming days, 40 million are likely to see temperatures reach or exceed 100 degrees.

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Lordstown Motors: A tale of hubris, political pandering and regulatory failure

Lordstown Motors is the quintessential business fiasco. Equal parts hubris, political pandering and regulatory failure.

Why it matters: There's no indication that anyone will learn their lesson, except perhaps for some random retail investors who didn't diversify.

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GM boosts investment in electric, autonomous vehicles by $8 billion

General Motors plans to boost its cumulative investment in electric and autonomous vehicles to $35 billion from 2020-2025, a significant jump from a $27 billion target.

Driving the news: GM said this morning that the initiative will include building two new battery cell manufacturing plants in addition to the two already under construction in Tennessee and Ohio.

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