Powell says Fed’s tools to combat coronavirus will remain until economy improves

Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin testify before a Senate committee regarding the CARES Act. FOX Business’ Edward Lawrence with more.

The U.S. economy suffered a deep decline from March through mid-May as a result of the coronavirus pandemic and the subsequent lockdown of activity, according to the Federal Reserve's Beige Book.

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Most of the Fed’s 12 districts reported a sharp decline in economic activity, the central bank said in its region-by-region roundup of anecdotal information known as the Beige Book. The report, prepared by the Federal Reserve Bank of St. Louis, was based on information collected through May 18.

"Economic activity declined in all Districts – falling sharply in most – reflecting disruptions associated with the COVID-19 pandemic," the report said. "Consumer spending fell further as mandated closures of retail establishments remained largely in place during most of the survey period."

In the two months since the economy locked down to limit the spread of the virus, 38.6 million Americans have lost their jobs, a rate unseen since the Great Depression. Just three months ago, unemployment sat at a half-century low.

The outbreak also has been a catalyst for bankruptcies among small and big businesses, and economists have warned of an unprecedented contraction in the nation's GDP in the second quarter, with Fed Chairman Jerome Powell acknowledging it could "easily" shrink by 30 percent.

This is a developing story. Please check back for updates.

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