Federal Reserve Chairman Jerome Powell is warning America that the economic downturn triggered by the coronavirus outbreak could last until the end of 2021.
In a CBS 60 Minutes interview on Sunday, he said it’s because recovery won’t happen until people feel confident about their safety.
“This is a time of great suffering and difficulty,” said Powell. “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.”
However, Powell expressed his belief that domestic economy recovery from the pandemic might not happen until late 2021.
“People will go back to work. Unemployment will get back down,” he said. “We’ll get through this. It may take a while, a period of time. It could stretch through the end of next year. We really don’t know.”
He also said a full recovery will be closely tied with consumer confidence in being around others.
“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.”
A New World Reality
Since mid-March, over 36 million Americans have filed for unemployment benefits. The sure came after states’ stay-in-place orders. Also, the fear of catching the virus left businesses and offices unable to retain employees.
“I don’t think [a second Great Depression is] a likely outcome at all,” he said. “There are some very fundamental differences. The first is the cause here—we had a very healthy economy two months ago. And this is an outside event, it is a natural disaster, in effect. And that’s one big difference.”
The Federal Reserve has injected trillions into the financial system to combat the economic downturn.
Democratic lawmakers in the House on Friday passed an additional $3 trillion stimulus relief package. However, the bill may not pass the Republican-led Senate. Senate Majority Leader Mitch McConnell has indicated that he believes there’s “no urgency” to act now.