Fed Chairman Jerome Powell says economic downturn could last until late 2021

rperper@businessinsider.com (Rosie Perper)
US Federal Reserve Chairman Jerome Powell.

Reuters

US Federal Reserve Chairman Jerome Powell says a US recovery from the novel coronavirus will most likely be slow and an economic downturn from the virus may last until late next year.

In an interview with CBS News' "60 Minutes" that aired Sunday night, Powell said Americans needed to prepare for a new economic reality.

"This is a time of great suffering and difficulty," he said. "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."

More than 36 million Americans have filed unemployment claims in eight weeks, with the full extent of the damage unclear. Economists agree that the US is already in recession because of coronavirus layoffs and industry shutdowns, which is spurring many US states to begin lifting coronavirus restrictions.

Powell remained optimistic that the economy would rebound.

"This economy will recover," he said. "It may take a while."

"It could stretch through the end of next year," he added, stressing that the US economy might not fully recover until the arrival of a COVID-19 vaccine.

"I think you'll see the economy recover steadily through the second half of this year," he said. "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 US has reported the most coronavirus cases of any country. As of Sunday evening, it had reported over 1.4 million cases and more than 89,000 deaths.

Powell said he supported government 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," he said, adding that he believed trillions of dollars in additional federal debt could be paid over decades.

"The US has been spending more than it's been taking in for some time," he said. "When unemployment is low, when economic activity is high, that's when you deal with that problem. This is not the time to prioritize that concern."

"We have the ability to borrow at low rates," he added. "We have the ability to service that debt. And I would say this is the time when we can use that strength to our longer-run benefit."

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