The United States is set for a strong economic rebound in the third quarter but additional government spending is still needed, Treasury Secretary Steven Mnuchin said on Tuesday.
The comments came as Mnuchin testified along with Federal Reserve Chair Jerome Powell before the House Financial Services Committee amid a continuing impasse in Washington over how much to spend to revitalize the US economy as it struggles with the Covid-19 downturn.
"I believe we will see tremendous growth in the third quarter fueled by strong retail sales, housing starts, home sales, manufacturing growth and increased business activity," Mnuchin said.
"America is in the midst of the fastest economic recovery from any crisis in the US," he added.
However Mnuchin acknowledged that "some industries particularly hard bit by the pandemic require additional relief," citing tourism and restaurants, among others.
The United States saw GDP plunge by a historic 31.7 percent annualized in the second quarter, but growth is expected to rebound sharply thanks to states' moves to resume business even as Covid-19 remains rife.
Facing business shutdowns that caused mass layoffs, Congress passed the $2.2 trillion CARES Act in March, which included a program of loans and grants for small firms as well as extra weekly payments to the unemployed.
However those provisions have expired, and Democratic and Republican lawmakers in Washington have yet to reach an agreement on another bill, with a $500 billion measure blocked by Democrats in the Senate earlier this month.
During the hearing, Powell repeated that the US economy may need more support, noting the stimulus checks and expanded unemployment payments provided under the CARES Act helped recover three-quarters of household spending lost due to the pandemic.
About half of the 22 million people laid-off in March and April have returned to work, and for those still unemployed, the recovery "will go faster for those people... if it's all of government working together," Powell said.
White House economic advisor Larry Kudlow had on Monday suggested the US economic recovery was strong enough that additional spending may not be needed, but on Tuesday moderated that stance, telling CNBC, "I don't think... recovery depends on the package, but I do think a targeted package could be a great help."
Mnuchin echoed those comments, telling House lawmakers President Donald Trump's adminstration was still ready to pass another bill, and supported sending out a second round of stimulus checks.
"The president and I remain committed to providing support for American workers and business," he said. "I believe a targeted package is still needed and the administration is ready to reach a bipartisan agreement."