Jerome Powell, the Federal Reserve chairman, said that the United States would have a slow recovery from what he called the "biggest shock that the economy's had in living memory," suggesting that a full rebound from virus-induced lockdowns could take until the end of 2021.
In an interview on "60 Minutes," the CBS program, Powell reiterated that both Congress and the central bank may need to do more to help workers and businesses make it through the sudden and sharp slump caused by efforts to contain the coronavirus.
"This economy will recover; it may take a while," Powell said. "It may take a period of time, it could stretch through the end of next year, we really don't know."
The Fed has rushed to insulate the economy as coronavirus lockdowns caused business activity to come to near standstill, leaving more than 20 million people jobless. But it remains an open question whether the central bank's actions will be sufficient if it takes a long time for the economy to fully reopen, leaving businesses short on income for an extended period and increasing the risk that many will close.
Powell has begun warning that lawmakers and the White House may need to do more to support households and businesses if the virus persists.
In his "60 Minutes" appearance, broadcast and streamed into millions of American homes, Powell reiterated that shepherding the economy through the darkest days of the coronavirus lockdown may require more policy action and suggested the recovery would not be seamless. Asked whether the economy could heal without an effective vaccine, Powell suggested that activity could restart before a treatment became available without making a complete rebound.
"Assuming that there's not a second wave of the coronavirus, I think you'll see the economy recover steadily through the second half of this year," he said. "For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine."
Powell pointed specifically to parts of the economy where people are in close contact — such as live events — as areas that might struggle to pick up before better protection is available.
The Fed chairman suggested that the worst economic readings were yet to come, even as states begin to gradually reopen. He said that he expected "a couple more months" of job losses and acknowledged that the unemployment rate, which hit 14.7% in April, could peak at 20% or even 25%. He said that as the economy contracts in the second quarter, it could "easily" fall by 20% or 30% on an annual basis.
Powell suggested that appropriate government policy could "buy time" for workers and companies, and that government efforts may need to span "maybe three or six more months."
"It may well be that the Fed has to do more," he said. "It may be that Congress has to do more. And the reason we've got to do more is to avoid longer-run damage to the economy."