Fed's Powell warns of prolonged recession, tells Washington to keep bolstering economy

Federal Reserve Chair Jerome Powell is reportedly warning about the threat of a prolonged recession as a result of the coronavirus and urging Washington to continue to help the U.S. economy avoid long-lasting damage.

“Deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell says in prepared remarks for an online discussion with the Peterson Institute for International Economics, according to the Associated Press. “Avoidable household and business insolvencies can weigh on growth for years to come.”

The Federal Reserve, Congress and the Trump administration have already injected trillions of dollars into the economy since the virus began to spread in the U.S. about eight weeks ago and businesses shuttered.

Still, widespread bankruptcies among small businesses and extended, record-high unemployment remains possible, Powell warned.

The U.S. government “ought to do what we can to avoid these outcomes, and that may require additional policy measures,” he said, according to the wire service.

Powell also reportedly said the Fed will “continue to use our tools to their fullest” until the pandemic subsides but gave no hint about the Fed’s next steps.