The Federal Reserve chairman, Jerome Powell, stated that the United States economy could easily contract by 20-30% amid the pandemic.
Jerome Powell had an interview with CBS. He said that the downturn of the economy might last until late 2021. Moreover, he adds that the full rebound might not happen until a vaccine is found.
However, he is confident that the economy will recover. Moreover, Powell said that he would never bet against the United States economy.
Mr. Powell, earlier this week, had called on United States lawmakers to pass more economic stimuli and aid for relief.
Since mid-March, more than 36 million Americans filed for benefits of unemployment.
Notably, he had an interview with CBS’s 60 minutes. There he said that that is a time of great difficulty and suffering. No one can put into words the pain people feel right now.
Nevertheless, he said that economy would recover, but it might take a while. It could stretch through to the end of next year, but no one knows for sure.
Unemployment can potentially peak at 25%. Moreover, lower-paid individuals (mainly women) were hurt worst by the downturn, added Powell.
Nevertheless, he believes that the United States could avoid depression (a sustained economic downturn). This is because the financial system itself was healthy. Moreover, the coronavirus pandemic is an extreme event that the economy could recover from at some point.
This quarter, the economy could easily contract by 20-30%. Nevertheless, Powell forecasted that the economy would recover steadily through to the second half of this year. But this would be in the event that the country avoids a second wave of the coronavirus.
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Powell said that it is especially important to avoid that scenario. In that case that they do not prevent it, it will be quite damaging to public confidence and the economy.
The United States already approved around $3 trillion of new stimulus spending. The package is worth an estimated 14 % of the economy of the country. The Federal Reserve took radical steps for shoring up the economy and pumping trillions of dollars into the finance sector.
Democrats in the House of Representatives passed an additional $3tn coronavirus relief package on Friday. Nevertheless, it is not forecasted to surpass the Republican-majority Senate. Moreover, the Republican-majority Senate leader, Mitch McConnell, argued that there is no urgency to act.
Alex Azar is a United States Health and Human Services Secretary. He defended the decision by most states to start lifting the lockdown measures.
On Sunday, Azar told CNN that local leaders must make the decisions. This is because, in almost half of their reporting countries, they have had not a single death. Moreover, over 50% of the cases came from just 2% of those countries.
According to a study by Reuters, only 14 US states have met the federally recommended guidelines to reopen. Thus, it suggests a decline in new cases daily for two weeks.
Peter Navarro is a White House trade adviser, who Mr. Azar disagrees with. Earlier on Sunday, Navarro said that the CDC (Centers for Disease Control and Prevention) let the country down with their performance on testing.
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