Federal Reserve Chairman Jerome Powell said that while he believed the economy would ultimately recover from the ongoing coronavirus pandemic, he didn’t expect it to return to normal potentially before the end of 2021.
“This is a time of great suffering and difficulty,” Powell said during a “60 Minutes” interview that aired Sunday. “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. And it’s going to take a while for us to get back.”
He continued: “This economy will recover. And that means people will go back to work. Unemployment will get back down. We’ll get through this. It may take a while.”
The coronavirus has wrought economic devastation throughout the country since many states began mandating residents stay at home and practice social distancing. Whole industries have been forced to shut down, at least temporarily, and more than 36 million people have filed for unemployment benefits in the last two months. Some regions have begun to jumpstart their economies again, despite warnings from medical advisors, in an effort to soothe some of that financial pain, but the figures released during the pandemic are already staggering.
The U.S. Chamber of Commerce reported that in 11 states more than a quarter of those who were employed in February are now out of work and Democrats in the House of Representatives passed a new, $3 trillion coronavirus relief bill meant to bail out states and send more financial support to millions of Americans.
At the same time, cases of the coronavirus have continued to spread. More than 1.4 million people in the U.S. have tested positive for COVID-19, and nearly 90,000 have died.
Powell said in the interview Sunday that certain conditions will likely need to be met before the American economy has any hope of a long-lasting return to normality, namely the discovery of a vaccine that can be widely distributed. Scientists say that any vaccine is at least 12 to 18 months away, but Dr. Anthony Fauci, the nation’s top infectious disease expert, told lawmakers last Tuesday there was no guarantee one would work.
“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,” Powell told host Scott Pelley. “For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine.”
The comments followed a stark message from Powell last week when he warned the fallout from the virus was “without modern precedent” and urged the government to sort out a new economic support package to help avoid longterm job losses.
Powell also said he expected the U.S.’ gross domestic product to shrink by up to a third in the second quarter of this year, although he said the economy could begin to grow once more by the third quarter of the year.
“You know, the numbers are going to be very high. And it’s hard to be precise. I wouldn’t want to guess,” he said of the loss in GDP. “You know, could easily be in the twenties or thirties.”
President Donald Trump has regularly said, without evidence, that the coronavirus could “go away” on its own. But he has also pledged that a vaccine would arrive by early next year despite concerns from the medical community about that timeline.
“We think we’re going to have a vaccine in the pretty near future,” Trump said during a news briefing this week. He later noted that: “Other things have never had a vaccine and they go away. So I don’t want people to think that this is all dependent on vaccine, but a vaccine would be a tremendous thing.”
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