Federal Reserve Chairman Jerome Powell said in a Sunday interview that the U.S. economy is unlikely to return to its pre-pandemic strength before the end of 2020, but may begin gaining strength in the second half of the year.
In an interview with “60 Minutes” aired Sunday evening, Powell warned that while the U.S. economy would recover, it may take until the end of 2021 for the country to fully rebound from the downturn caused by the coronavirus pandemic.
“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 but I would just say this: In the long run, and even in the medium run, you wouldn’t want to bet against the American economy,” Powell said.
Powell added that a full recovery would depend how soon people could feel confident gathering in close spaces, which may take until an effective COVID-19 vaccine is widely available.
“The parts of the economy that involve people being in the same place very close together, those parts of the economy will be challenged until people feel really safe again,” Powell said.
“Lots of the rest of the economy though can move ahead. But we can’t fully recover because those other parts of the economy matter.”
The U.S. economy lost at least 21.4 million jobs since the spread of COVID-19 forced thousands of businesses to close and lay off millions of workers. The unemployment rate spiked to post-Great Depression high of 14.7 percent and more than 36 million Americans have filed new claims for unemployment benefits, though economists say the damage is likely much deeper.
Powell acknowledged Sunday that the U.S. gross domestic product (GDP) would shrink at an annualized rate of close to 30 percent between April and June with the unemployment rate rising to nearly 25 percent. The last time one-fourth of U.S. workers were unemployed was the depths of the Great Depression.
Even so, Powell stressed that “the thing that matters more than anything else is the medical metrics, frankly. It’s the spread of the virus—the real time economic data that we’re seeing is just a function of how successful the social distancing measures are.”
Powell’s warning comes days after he shook Wall Street and Washington in a Wednesday speech urging Congress to consider another round of fiscal stimulus despite already deploying more than $3 trillion in aid.
He also told “60 Minutes” that while the Fed would continue to flood the U.S. economy with emergency loans and asset purchases, the central bank’s unprecedented push would not be enough on its own.
“There was no precedent in post-World War II American history that’s even close to what Congress has done, and the question is, will it be enough? And I don’t think we know the answer to that,” Powell said. “It may well be that the Fed has to do more. It may be that Congress has to do more.”
He added that the most effective relief from Congress would be “policies that help businesses avoid avoidable insolvencies, and that do the same for individuals.”
“Keep workers in their homes. Keep them paying their bills. Keep families solvent,” Powell said.