Fed's Powell thinks recovery might take until 2021 but says, 'This economy will recover'

Powell suggests bad economic numbers won't last as long as those during Great Depression

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Federal Reserve chairman Jerome Powell.
Federal Reserve chairman Jerome Powell.
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Updated: May 18, 2020 - 10:21am

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Federal Reserve Chair Jerome Powell is bracing Americans for a slow but successful economic recovery from the coronavirus pandemic, acknowledging that a full turnaround could take until 2021 and that U.S. unemployment could hit 25 percent.

“Those numbers sound about right for what the peak may be,’ Powell said when asked about the situation during a CBS "60 Minutes" interview aired Sunday night. “This economy will recover. … It could stretch through the end of next year. We really don't know.”

The Fed has poured trillions into U.S. financial markets to help avoid a full meltdown during the pandemic, which started about five months ago. Powell’s moves and comments are a key signal for investors, with the ability to almost immediately market gains or losses. 

Despite the sobering analysis, downplaying hopes for a quick recovery and return to a booming U.S. economy, Powell predicted recovery will come more quickly than during the Great Depression.

“The central bank has taken extraordinary measures to rescue the economy since the pandemic began sweeping through the country – slashing interest rates to zero, rolling out trillions of dollars in lending programs for financial markets, and taking the unprecedented step of bailing out state and city governments,” Powell also said Sunday.

“‘There’s really no limit to what we can do with these lending programs,’ Powell said. ‘There’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.’”

 

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