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Illustration: Eniola Odetunde/Axios

After the House of Representatives released a proposed $3 trillion relief bill on Tuesday, Fed chair Jerome Powell weighed in, backing calls for Congress to do more to battle the economic impact of the coronavirus pandemic.

Why it matters: Expectations for the pandemic-fueled recession are morphing from a short-term downturn to a potentially yearslong slog and economists are urging policymakers to adjust government spending accordingly.

  • Powell's comments Wednesday made him the latest and perhaps most influential voice in a chorus advocating more fiscal spending.

Driving the news: In pre-written remarks, Powell detailed the harms of "deeper and longer" recessions, warning that "the recovery may take some time to gather momentum and time can turn liquidity problems into solvency problems."

  • "Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery," Powell said during a webcast with the Peterson Institute for International Economics.

Between the lines: "Fed officials are unanimous on this — they are all in on, 'Congress has to do more,'" Claudia Sahm, a former top Fed economist and now director of macroeconomic policy at the Washington Center for Equitable Growth, said during a separate online event.

What's happening: Recent economic studies and business developments are starting to back Powell's worries that the Fed and Congress will need to provide assistance to the U.S. economy for some time.

  • In addition to the record high unemployment rate, thousands of business closures and wave of bankruptcies, new academic research estimates that 42% of recent layoffs will result in permanent job loss.

Yes, but: "Right now in the White House, we’re in wait-and-see mode," White House economic adviser Kevin Hassett said during a briefing with the Brookings Institution Tuesday.

  • Hassett argued that some of the big-ticket items in the House's so-called Heroes Act — which includes nearly $1 trillion for states and municipal governments, a second round of $1,200 direct payments for individuals, a $175 billion housing assistance fund, a 15% increase in food stamps and more — could be "putting the cart before the horse."
  • Republican senators also point to the annual U.S. budget deficit that has already topped $4 trillion as a reason for patience.

Yes, but, but: "We are in an election year and have had bipartisan support for lots of spending already," Kevin Barry, CIO of investment adviser CAPTRUST, tells Axios.

  • "Do I think there will be significant political interest in additional support? The answer is yes."

Go deeper:

Go deeper

Investors are looking for more action from the Fed in the coming months

Expand chart
Data: Federal Reserve; Chart: Axios Visuals

Minutes from the Fed's July policy meeting were released Wednesday and policymakers' dour outlook suggests that more easing and stimulus could be on the way, strategists who closely watch the central bank say.

Why it matters: More liquidity from the Fed could mean more gains for stock and bond prices and further erosion of the dollar.

Updated 1 hour ago - World

Pentagon: 8,500 troops on high alert for possible deployment to eastern Europe

Photo: Anna Moneymaker/Getty Images

Defense Secretary Lloyd Austin has placed 8,500 U.S. troops on "heightened preparedness to deploy" to eastern Europe in case NATO activates its rapid-response force over tensions with Russia, the Pentagon announced Monday.

Why it matters: No decisions have been made to deploy U.S. forces, but the heightened alert level will allow the military to rapidly shore up NATO's eastern flank in the event that Russia invades Ukraine. The Pentagon warned that Russia has shown "no signs of de-escalating," and continues to amass troops on Ukraine's borders.

Alabama's new congressional map rejected by federal judges

The Alabama State Capitol in Montgomery. Photo: Taylor Hill/Getty Images

Federal judges on Monday night blocked Alabama's newly drawn congressional map and ordered the Republican-led State Legislature to create a new one that includes two districts, rather than the planned one.

Why it matters: "Black voters have less opportunity than other Alabamians to elect candidates of their choice to Congress," the panel of three judges wrote in their ruling.