Karl W. Smith, Columnist

Powell’s Warning to Congress About the Next Recession

The Fed will need help stimulating the economy when the next downturn hits.

November 13, 2019 at 10:45 PM UTC

Karl W. Smith is a Bloomberg Opinion columnist. Previously, he was vice president for federal policy at the Tax Foundation and assistant professor of economics at the University of North Carolina.

Sending a message to Congress.
Photographer: Al Drago/Bloomberg

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Federal Reserve Chair Jerome Powell had a message for Congress in his testimony Wednesday before the Joint Economic Committee: The Fed won’t be able to fight the next recession all by itself — it’s going to need help from Congress.

Powell is undoubtedly correct that fiscal policy will have to play a major role in any response to the next economic crisis. But he should also be realistic about what it can achieve. The Fed will also need a better monetary framework.