Business International

Fed chairman Powell warns downturn ‘may last until late 2021’

The chairman of the Federal Reserve says the US economy could “easily” contract by 20-30% amid the pandemic.

Jerome Powell added in a CBS interview that the economic downturn might last until late 2021, and a full rebound may not be happen until a vaccine is found.

However, he expressed confidence the economy would recover, and said he would never bet against the US economy.

Earlier this week, Mr Powell had called on US lawmakers to pass more economic stimulus and relief aid.

More than 36 million Americans have filed for unemployment benefits since mid-March.

In an interview with CBS’ 60 minutes, Mr Powell said: “This is a time of great suffering and difficulty… you can’t really put into words the pain people are feeling.

“This economy will recover. It may take a while,” he said. “It could stretch through the end of next year. We really don’t know.”

Unemployment could potentially peak at 25%, and “the lowest paid people” – particularly women – were being hurt worst by the downturn, he added.

However, he said he believed the US could avoid a depression – a sustained economic downturn – because the financial system itself was healthy, and the coronavirus pandemic was “an outside event” the economy could recover from.

While the economy could “easily” contract 20-30% this quarter, he expected the economy to “recover steadily through the second half of this year”, as long as the country could avoid “a second wave of the coronavirus”.

“It’s very important to avoid that… that would be quite damaging to the economy and also to public confidence.”

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