The U.S. economy will recover from the COVID-19 pandemic, but the process could stretch through until the end of 2021, Federal Reserve Chairman Jerome Powell has said.
“Assuming there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of this year,” Powell said in an excerpt of an interview that aired Sunday morning on CBS’s “Face the Nation.”
“For the economy to fully recover, people will have to be fully confident. And that may have to await the arrival of a vaccine,” he said.
The Fed chief noted that people should not “bet” against the American economy in the long run, even in the medium run.
“This economy will recover. It may take a while. It may take a period of time. It could stretch through the end of next year. We really don’t know,” he said.
At an online event held by the Washington-based think tank Peterson Institute for International Economics, Powell warned that a prolonged recession and weak recovery from the pandemic could lead to an extended period of low productivity growth and stagnant incomes.
While the economic response has been “both timely and appropriately large,” it may not be the final chapter, given that the path ahead is both “highly uncertain” and subject to “significant downside risks,” he said.
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II,” said the Fed chief.
More than 36.5 million Americans have applied for unemployment benefits since the COVID-19 pandemic forced widespread business closures in mid-March, according to the Labor Department.