U.S. Federal Reserve Chairman Jerome Powell is warning that the economic recovery from the coronavirus pandemic could take longer than anticipated and depend on the development of a vaccine.
During a televised interview on the program “Face the Nation,” Powell said the U.S. economy will recover from the coronavirus pandemic, but the process could take until the end of 2021 and that a vaccine against the illness is urgently needed.
“I think you’ll see the economy recover steadily through the second half of this year,” the U.S. central bank chief said during the interview. “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.
More than 36 million Americans have lost their jobs since February as the economy shuttered to limit the spread of COVID-19. Countless companies, especially small businesses, are facing bankruptcy, while states and cities are confronting gaping budget shortfalls that could provoke a massive second wave of layoffs in the public sector.
The Fed chief said people should never bet against the U.S. economy, but he would not forecast a quick V-shaped rebound. “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.”
Powell’s comments follow his warning last week that the U.S. economy faces lasting harm from the pandemic if the government doesn’t step up with more relief measures. The comments add support for more congressional spending as Democrats push for $3 trillion U.S. in virus aid on top of a record $2.2-trillion U.S. aid package delivered in March.
Powell is scheduled to appear before the Senate Banking Committee on Tuesday this week, where he will answer questions from Democrat and Republican politicians.
