United States faces serious economic recession in the wake of the global pandemic, but it will not suffer another Great Depression, and this year it will begin to recover, Federal Reserve President Jerome Powell said Sunday. Read: Do you want to take out a credit? Check these tips
The world’s main economy was strong before the COVID-19 outbreak, which caused the closure of companies across the country, Powell said.
The data shows that more than 30 million jobs were destroyed as thousands of companies closed across the country to stop the spread of the virus.
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For the April-June period, the numbers “will be very, very bad. There will be a big decrease in economic activity, a big increase in unemployment,” Powell told the CBS program “60 minutes.”
But “there are some very fundamental differences” between the current crisis and the Great Depression of the last century, he noted.
The US economy could fall “easily” by 20-30% this quarter, and unemployment could hit 20-25%, but “it should be a much shorter recession than that associated with the 1930s “
The other key difference from that crisis is that, instead of raising interest rates, the Fed lowered them to zero and is willing to study new ways to support the economy, Powell said.
From the third quarter
I think there is a good chance of positive growth in the third quarter, “said the Fed chairman.
But he warned that it may take time to return to normal and that the United States will not see a full recovery without a COVID-19 vaccine.
“The economy will recover steadily during the second half of this year,” but full recovery “will take time,” he said. “It could run until the end of next year. We really don’t know.”
For the economy to fully recover, people will have to have complete confidence, and that will be with the arrival of a vaccine, “he said.
The Fed lowered the benchmark lending rate and injected billions of dollars into the financial system and into programs aimed at supporting small and medium-sized businesses and state and local governments.
Powell said the Federal Reserve is prepared to make more efforts along the same lines, and reiterated that more public spending will be needed to support workers and companies to allow the economy to recover.
“If we allow people to be out of work for long periods, if we let companies fail unnecessarily, there will be long-term economic damage,” he stressed.
“The good news is that we can avoid this by giving more support now.”. The crisis “has come so fast and with such force that the pain that people feel and the uncertainty that currently reigns cannot really be expressed in words,” he said.