David Dayen, executive editor of The American Prospect, said Friday that the Federal Reserve’s drastic expansion of efforts to bolster the U.S. economy in March amid the coronavirus pandemic has contributed to the stock market’s quick rebound.
“If you actually dig into the stock numbers, and all the capital markets really, not just stocks, you see that there was a deterioration in February, and particularly in March, and everything ends on March 23, and there’s this complete bounce back,” Dayen told Hill.TV.
“Now what happened on March 23? It was on that day that the Federal Reserve made an announcement that it would essentially do whatever it takes to prevent the investors from taking losses from the coronavirus crisis,” he continued.
The Fed on March 23 announced the expansion of its efforts to stabilize financial markets, with the Federal Open Market Committee, which is responsible for setting Fed monetary police, saying that it would purchase an unlimited quantity of Treasury bonds and mortgage-backed securities.
Dayen noted that the $2.2 trillion CARES Act signed into law in late March contained $500 billion in emergency economic stabilization funds for the Treasury Department.
“Everything really proceeded from there. Stocks went way back up. Corporate bonds, ETFs that track corporate bond markets went way back up. Every major corporation floated debt, and everything sort of went back to normal for the markets,” Dayen told HillTV.
Data released by the Labor Department on Friday showed that the U.S. added 2.5 million jobs in May and unemployment dropped to 13.3 percent, even amid the ongoing coronavirus pandemic.
The numbers came as a surprise to economists, whose expectations were that the data would show another increase in joblessness after the country lost 20.7 million jobs in April.
President Trump on Friday celebrated the gains, calling the numbers “incredible.”
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