The coronavirus pandemic is putting unprecedented strain on the U.S. economy, Federal Reserve Chairman Jerome Powell said Thursday in an exclusive interview with Savannah Guthrie on the “TODAY” show, noting, “There can be a good rebound on the other side of this.”
“We may well be in a recession,” Powell said, in a rare live interview. “But I would point to the difference between this and a normal recession. There is not anything fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.”
“This is a unique situation,” Powell said, when asked if the economy could withstand a monthlong shutdown. “I think people need to understand this is not a typical downturn. People are being asked to close their business, to stay home from work, and to not engage in certain economic activity, and so they are pulling back. At a certain point, we will get the virus under control and confidence will return.”
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The Federal Reserve has launched a series of emergency moves since the viral outbreak started to erode the U.S. economy. The central bank slashed interest rates twice this month, down to nearly zero, and has pumped trillions of dollars into the financial system to shore up the economy, backstop credit, and stabilize the dollar.
The Fed said such extreme action was warranted because “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States.”
By making borrowing as cheap as possible, the central bank hopes to give companies and individuals ready access to nearly interest-free cash to invest and spend.
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“We’re trying to make a bridge from a very strong economy to another place of economic strength,” Powell said Thursday, by stepping in and replacing lending to small- and medium-sized businesses and other “places where credit is not being offered.”
Powell’s comments come the morning after the Senate overwhelmingly passed a massive $2 trillion rescue package, the government’s own response to the harsh economic blow from the coronavirus pandemic.
The Senate approved the 880-page bill in a unanimous 96-0 vote. The measure would provide billions of dollars in credit for struggling industries, a significant boost to unemployment insurance and direct cash payments to Americans.
With regard to President Donald Trump’s hope to reopen the economy by Easter, Powell said, “We are not experts in pandemics over here. We don’t get to make that decision. We would tend to listen to the experts. Dr. [Anthony] Fauci said something like, ‘The virus is going to set the timetable,’ and that sounds right to me.”
“The sooner we get the virus under control, people will very willingly open back up their businesses and get back to work,” Powell said.
This is a breaking story, check back for updates.
