The head of the Federal Reserve System (FRS) of the United States, Jerome Powell, during an interview with CBS News on Sunday, gave an assessment of the prospects for the US economy, which was not particularly rosy. In his opinion, the process of restoring the economy to the levels at which it was before the pandemic could last until the end of 2021, and the materialization of such a scenario would require the development of an effective vaccine against Covid-19.
“In order for the economy to fully recover, it is necessary that people be very confident. And this may not happen until the vaccine appears, ”Powell said, adding that“ provided that the second wave of coronavirus does not follow … you will see a steady economic recovery during the second half of this year. ”
Powell warned that the negative effects of coronavirus in the near future will continue to be reflected in statistics, in particular a couple of months more likely to reduce the number of jobs, and the unemployment rate may jump to 20% – 25%. However, the head of the Fed sees a ray of light in the data on the labor market in the fact that in most cases, people who applied for unemployment benefits report that they lost their jobs temporarily, which allows them to hope for their return to their previous work when the dust settles.
The head of the Fed noted that lawmakers “did a great job and did it very quickly,” but the US Congress and the Fed may need to do more to avoid long-term negative effects on the economy. According to him, fiscal support for people and businesses to prevent bankruptcy that can be avoided will allow the United States to provide a platform for a strong recovery after the crisis. At the same time, Powell once again confirmed his opinion about the inappropriateness of using negative rates as an incentive tool.