The Fed warned of ‘tragic’ consequences if the US didn’t do more to support its economic recovery. Hours later, Trump killed talks about more stimulus.

Photo caption: President Donald Trump and Federal Reserve Chairman Jerome Powell. Reuters. Article by Ben Winck.

• Federal Reserve Chair Jerome Powell on Tuesday made his most pronounced call yet for additional relief spending, saying that the risks of passing too little stimulus far outweighed the risks of overspending and that a diminished rebound would be “tragic.”
• Hours later, President Donald Trump said in a tweet that he was abruptly ending stimulus negotiations and that he would enact a spending bill if he is reelected in November.
• The move shocked investors, economists, and even other Fed officials. With millions of Americans still unemployed, the absence of new government support threatens to curb the already slowing economic recovery.
• Leaving the economy to move forward without help is like “letting the forest fire just rage,” Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said on CNBC, adding that the downturn could become “much, much worse.”
• Some hope remains for near-term aid. Trump tweeted on Tuesday night that he’d still approve standalone measures for emergency airline aid, Paycheck Protection Program funds, and another round of direct payments. […]

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