Federal Reserve policy makers on Wednesday highlighted the importance of fiscal stimulus for an economic recovery that recently has outperformed forecasts.

Chairman Jerome Powell continued to wave the fiscal flag carefully at a congressional hearing -- amid a political stalemate over a new package -- saying that more support was likely to be necessary. Others were more full-throated, with Cleveland Fed President Loretta Mester saying it was very much needed given the “deep hole” the economy is climbing out of.

Chicago Fed President Charles Evans expressed concern the stimulus he penciled in won’t be forthcoming, while Boston Fed President Eric Rosengren suggested it’ll take another wave of infections to prompt action, and likely not until next year.

Declines in the stock market, until recently attributed to a reversal of excessive tech-share gains, have increasingly been attributed in part to worries about the recovery and the need for more stimulus. The S&P 500 Index was down 1.7% as of 2:22 p.m. in New York, the fifth drop in six days.

“The most difficult part of the recovery is still ahead of us,” Rosengren said in remarks Wednesday, saying he was more pessimistic than his colleagues over how many Americans will return to work over the next 15 months.

Financial Impact
The Boston Fed chief raised particular concern over “disturbing” signs in commercial real estate. The sector saw risky behavior before the pandemic and is now being hit by the coronavirus’s impact on everything from hotels to strip malls, he said.

“A structural shock, like the pandemic, can result in a significant increase in the number of nonperforming loans, eventually impinging the ability of banks and insurance companies to continue to make credit available to borrowers,” Rosengren said.

Like Powell, Fed Vice Chair Richard Clarida, in an interview on Bloomberg Television, emphasized the recovery has so far been stronger than officials predicted a few months ago. He also made clear the road ahead will be difficult and repeated the theme that fiscal support would help.

‘Deep Hole’
“The economy is recovering robustly, but we are still in a deep hole,” he said. “Long term, the U.S. needs to get back on a sustainable fiscal path, but you don’t want to start that in the midst of the worst economic hit in 90 years.”

In new economic forecasts released Sept. 16, Fed officials had a median projection for unemployment at 7.6% next quarter, down from the 8.4% recorded in August, with a further drop to 5.5% at the end of 2021.

Rosengren said his own projections were “less optimistic.” Evans noted that his own forecast incorporated an expectation of $1 trillion of further fiscal support.

Democrats and Republicans have been at loggerheads over another fiscal stimulus package, with no formal negotiations since early August.

This article was provided by Bloomberg News.