Federal Reserve Chairman Jerome Powell says that America’s economy may not recover from the COVID-19 crisis until the end of 2021, casting doubt on hopes for a quick, V-shaped rebound.
“It could stretch through the end of next year,” Powell said. “We really don’t know. We hope that it will be shorter than that, but no one really knows.”
He said second-quarter economic activity, as measured by gross domestic product (GDP), could fall by an annualized rate of more than 30 percent.
“The numbers are going to be very high. And it’s hard to be precise. I wouldn’t want to guess,” he said. “[It] could easily be in the 20s or 30s.”
Powell’s remarks reinforce statements he made last week, in which he warned of lasting harm to the U.S. economy unless policies were brought to bear to counteract the damage.
“This is a time of great suffering and difficulty,” Powell told CBS. “And it’s come on us so quickly and with such force, that you really can’t put into words the pain people are feeling and the uncertainty they’re realizing.”
Still, Powell told CBS that he doesn’t expect the United States to suffer a repeat of the Great Depression, vowing that the Fed would act to prevent the worst.
“In the long run, and even in the medium run, you wouldn’t want to bet against the American economy. This economy will recover,” he said. “There’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.”
Still, Powell said that for a robust economic rebound, consumer confidence would have to see a revival.
“Assuming that there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of this year,” he told CBS. “For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine.”
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