Sci-tech

Powell warns U.S. recovery could stretch through end of 2021

Powell warns U.S. recovery could stretch through end of 2021”

The US economy, the world's largest, which has been thrown into a recession due to the coronavirus pandemic, will rebound but the recovery could stretch through the end of next year, Federal Reserve Chairman Jerome Powell has said. And the banking system had been rebuilt stronger since the global financial crisis.

Data show more than 30 million jobs were destroyed in the U.S., as businesses were shuttered nationwide amid the efforts to stop the spread of the virus. "There'll be a big decline in economic activity, big increase in unemployment", Powell told the CBS program "60 Minutes".

"I don't think [a second Great Depression is] a likely outcome at all", he said. Those are levels reminiscent of the Great Depression in the 1930s, though Powell said he thought a prolonged crash of that magnitude remains unlikely.

If necessary, Powell said, the Fed could expand any of the nine emergency lending programs it has launched since the viral outbreak began to harm the economy - or create new ones.

"In the long run, and even in the medium run, you wouldn't want to bet against the American economy", Powell said. Powell said unemployment may hit 25 percent before it begins to fall and gross domestic product may contract at an annualised rate of perhaps 20 percent in the April through June period. "It may take a period of time, it could stretch through the end of next year, we really don't know".

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"That would mean", he added, "that we will start our recovery and get on that road, and that'll be a good thing, but that it'll take some time to pick up steam".

Asked about the need for a vaccine to treat the illness and put a stop to the coronavirus pandemic, Powell stressed the importance of consumers to the economy.

Powell reiterated his view that both Congress and the Fed must be prepared to provide additional financial support to prevent permanent damage to the economy from widespread bankruptcies among small businesses or long-term unemployment, which typically erodes workers' skills and social networks.

In his "60 Minutes" appearance, broadcast and streamed into millions of American homes, Mr. Powell reiterated that shepherding the economy through the darkest days of the coronavirus lockdown may require more policy action and suggested the recovery would not be seamless. "The recovery will be slower", he said.

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