In parallel, US Federal Reserve Chairman Jerome Powell called on Wednesday, lawmakers to make every effort, even if costly, to avoid a prolonged recession that will have severe repercussions again for the disadvantaged.
“Additional budget support may be costly, but it is worth it if it allows us to avoid economic damage in the long run and allow us to achieve a stronger recovery,” Powell said during an online meeting with the Peterson Institute in Washington. He added, “The current slowdown is unique, as it is due to Covid 19 and the measures taken to contain it.”
Against the backdrop of Powell’s comments, Wall Street fell. And 20 minutes after the start of trading, the Dow Jones Industrial Average fell 0.9%.
To date, Congress has provided $ 2900 billion in budget support to families, institutions, health care providers, and local states and municipalities, or about 14% of gross domestic product.
Powell noted that the gains made in the employment sector in the past decade have “evaporated”, and in less than two months the country has lost more than 20 million jobs.
The unemployment rate rose to 14.7% last April, at the highest level in 80 years, at a rate similar to that of the 1930s. In February, it recorded its lowest level of 3.5%.
Powell pointed to a Federal Reserve study to be published Thursday that shows that among the people who had a job in February before the outbreak of the epidemic, “about 40% of families whose breadwinners earn less than $ 40,000 a year lost their jobs last March.” He added that the lives of these individuals changed suddenly and their future prospects are murky.
The US central bank has taken a series of measures to support the economy, families, and institutions: cutting interest rates to almost zero, and exceptional easing of rules to allow banks to lend and pumping liquidity into the financial system.
A new accusation to China
The United States has formally accused China of trying to piracy research by American institutions and health centers on a vaccine against the Corona virus, in a new escalation of the bilateral dispute over dealing with the global epidemic.
A joint statement issued today, Wednesday, by the Federal Bureau of Investigation and the Ministry of National Security, said that “organizations that conduct research on the disease have been warned of a possible targeting by the People’s Republic of China,” according to the website of the American “Al-Hurra” channel.
“China ‘s efforts to target these sectors pose a major threat to our countries’ response to Coved 19,” the statement said.
The announcement adds to the many accusations the Trump administration has made against China for allegedly stealing billions of dollars in US intellectual property. And two days ago, the US authorities warned researchers in the field of health and scientific care that hackers backed by China are trying to steal research and intellectual property related to treatments and vaccines for Corona virus.
Earlier Wednesday, the Wall Street Journal quoted unidentified US officials as saying that “Chinese and Iranian pirates are aggressively targeting American universities, pharmaceutical and health care companies in a way that might hinder efforts to find a vaccine to combat the emerging corona virus.”
China has denied these allegations, as Foreign Ministry spokesman Zhao Li Jian said at a press conference in Beijing on Monday that these unsubstantiated accusations are “purely slanderous, fabricated and immoral,” adding that “China is a leader in The field of vaccine development.
Sudden decline in crude stocks
Crude stocks in the United States fell unexpectedly, along with gasoline stocks, while distillate stocks increased, according to the US Energy Information Administration.
Crude inventories fell 745 thousand barrels in the week ending May 8 to 531.5 million barrels, while analysts expected in a poll conducted by «Reuters» an increase of 4.1 million barrels.
Crude stocks at the delivery point in Cushing, Oklahoma, fell three million barrels in the most recent week, according to the administration. The rate of crude consumption in refineries decreased 593 thousand barrels per day last week, and the rate of utilizing the refineries capacity decreased 2.6 percentage points.
US gasoline stocks fell 3.5 million barrels over the week to 252.9 million barrels, according to the Information Administration, compared to a drop of 2.2 million barrels, which analysts had expected in a Reuters poll.
Distillate stocks, which include diesel and heating oil, rose 3.5 million barrels to 155 million, while they were expected to rise by 2.9 million barrels. The net US imports of crude fell by 300,000 bpd last week.