Stocks surged Tuesday on better-than-expected retail sales numbers and hopes for more stimulus as the Federal Reserve pledged to continue supporting a U.S. economy showing signs of inching back from the coronavirus-related lockdowns.
Federal Reserve Chairman Jerome H. Powell said he's confident in a long-term recovery but that the Fed would continue to leverage all the tools at its disposal and Congress might need to pass another round of stimulus spending.
The Dow Jones Industrial Average closed up about 527 points, or more than 2%.
President Trump pointed to the report of the biggest one-month increase in retails sales as more evidence that the economic rebound is "way ahead of schedule."
"I'm building it up again — here we go again," Mr. Trump said at a White House event. "Jobs are rapidly coming back and retail sales were up a staggering 17.7%. The stock market went through the roof."
He said of his pro-growth economic policies, "We did it once, and we're very easily doing it again. We're way ahead of schedule."
Retail sales jumped in May following three straight months of decline, as states began reopening businesses that had been shuttered by the coronavirus crisis.
The president predicted one of the best economic years in history in 2021, barring a victory in November by Democratic rival Joseph R. Biden.
"Unless my formula is tampered with, we will soon be in a stronger position than we were before the plague came in from China," Mr. Trump said.
Vice President Mike Pence hailed America's "transition to greatness" during a stop at the Winnebago plant in Forest City, Iowa.
"I know you had to shut down but you opened right back up," Mr. Pence said. "You put people back to work and you got America back on the road."
He said every state in the nation and three-quarters of America's small businesses have begun to reopen.
Mr. Pence highlighted a recent employment report that said the economy added 2.5 million jobs as part of the recovery from virus-related shutdowns, before pivoting to Tuesday's promising retail numbers.
"The largest monthly increase ever recorded. America is going back to work," Mr. Pence said.
Despite the signs of a swift economic recovery, the president and some of his advisers are eyeing another round of emergency spending — as much as $2 trillion — to further boost the economy.
Senior administration officials also are floating a $1 trillion infrastructure proposal. The president will promote a plan Thursday for expanding broadband capabilities.
House Democrats last month approved a $3 trillion stimulus bill, which would add on to the roughly $2.5 trillion already spent by Congress and the administration to rescue businesses and workers during the pandemic.
Mr. Powell said signals from retail sales and a positive May jobs report point to a nascent recovery, but Congress and the Fed might need to do more.
"I would say there's a reasonable probability that more will be needed, both from you and from the Fed," he told the Senate Banking Committee. "Long run, I am confident that we will have a full recovery we just have to be a little patient with it."
He also said a long-awaited "main street" lending program for small- and medium-sized businesses is effectively up and running, and the Fed this week announced that it was seeking input on potentially expanding the program to include nonprofit groups.
The Fed on Monday announced more details on how it plans to purchase corporate bonds to expand credit for large employers. Mr. Powell said on Tuesday they planned to adjust things based on economic conditions.
As Congress weighs another stimulus package, Mr. Powell said some kind of continued aid for the unemployed will likely be needed with millions of Americans still out of work.
Democrats and Republicans are at odds over whether to extend a $600-per-week boost in federal unemployment benefits that make it more lucrative in many cases for recipients to take the benefits instead of returning to work.
"I think there are going to be an awful lot of unemployed people for some time," he said. "I think something will likely wind up being appropriate there."
Democrats and governors across the country have also pressed Congress to approve another $500 billion in aid to state and local governments that are facing budget crunches because of the pandemic.
"It's certainly an area where I would be looking if I were you," Mr. Powell said. "State and local governments provide those critical services and they have balanced budget requirements, so the layoffs come very quickly when revenues go down and expenses go up."
While expanding federal deficits are an acceptable trade-off in the short run, the U.S. needs to eventually turn away from an "unsustainable" path on spending and debt, he said.
Meanwhile, several conservative allies of the administration urged the White House not to accept a "phase four" relief spending bill, especially one with the contours proposed by House Democrats.
Economist Steve Moore noted that the government already is breaking a record for deficits during this fiscal year. He said adding the House Democrats' bill would put total federal spending this year at more than $11 trillion, or more than 50% of gross domestic product — a level he called "catastrophic."
"We find that to be very economically damaging to our country and to future generations because so much will be funded by them," Mr. Moore said in a conference call hosted by the conservative Committee to Unleash Prosperity.
Former Sen. Jim DeMint, South Carolina Republican, said the group's polling shows very little appetite for the government taking on more debt.
"The president needs to know there is a broad consensus in the country not to spend more money," he said.
They said the best option going forward is a payroll tax holiday, which Mr. Trump has been advocating.
• Tom Howell Jr. contributed to this report.