The Federal Reserve chairman Jerome Powell appeared on morning TV urging patience and quick action in controlling the spread.
Appearing on NBC’s Today Show Thursday – a network morning show when many Americans are homebound and paying close attention -, the Federal Reserve Chairman Jerome Powell gave a message to the nation regarding what is next for the US economy, which ‘may well be in recession’.
He was clear to say that progress in controlling the spread of the coronavirus disease will determine when the economy can fully reopen. He assured the Fed is taking every action to support a vigorous rebound when it comes.
According to Reuters reporting by by Howard Schneider, Editing by Chizu Nomiyama and Andrea Ricci, Powells’ message meant to prepare people for the dismal economic data to come, counsel patience in any rush back to work, and reassure that the Fed would act “aggressively” to keep firms and families afloat. The U.S. central bank chief’s remarks are a contrast to the urging by some of President Donald Trump’s advisers for a faster reopening. The president himself has said he wants the economy to be “roaring” by Easter, in a little over two weeks. “This is not a typical downturn…There is nothing fundamentally wrong with our economy,” Powell said. “The sooner we get through this period and get the virus under control, the sooner the recovery can come…We know that economic activity will decline probably substantially in the second quarter but I think many expect and I would expect economic activity to resume and move back up in the second half of the year.” The Fed has authorized over the past two weeks is precisely to let an otherwise healthy economy pause long enough to keep people safe, Powell said, before what could be a strong rebound later in the year, he ensured the central bank would lend “aggressively” to ensure that happens, with an expected commitment of more than $440 billion from the U.S. Treasury allowing the Fed to unleash perhaps $4 trillion for credit to “Main Street.”
Powell spoke just about an hour before federal data showed a record-breaking spike of unemployment claims to 3.28 million. Unemployment applications generally mirror the rate of layoffs. So when claims jump by 3 million in a week, it’s safe to say coronavirus is ravaging the U.S. economy. This release, The Guardian adds, sees this as the first official glimpse of the severe economic downturn that the US faces as companies shutter businesses and states across the country move to prevent people from gathering in crowds in an attempt to contain the virus that spread. By the end of May, the U.S. could lose twice as many jobs as it did during the Great Recession, the UN predicts. Globally, this can mean 25 million jobs lost.