Powell warns that long downturn would mean severe damage

Federal Reserve Chairman Jerome Powell says the country is facing a deep downturn with “indispensable uncertainty” about the timing and strength of an economic recovery

By

MARTIN CRUTSINGER AP Economics Writer

June 16, 2020, 2: 01 PM

2 min read

WASHINGTON —
Federal Reserve Chairman Jerome Powell says the U.S. economy faces a deep downturn with “indispensable uncertainty” about the timing and strength of a recovery. He warns that the longer the recession lasts, the more serious the damage that will more than doubtless be inflicted on the job market and companies.

Powell stresses in willing testimony to Congress that the Fed is dedicated to the utilize of all its financial tools to cushion the industrial damage from the coronavirus. But he says that until the general public is confident the disease has been contained, “a stout recovery is now per chance now not.”

The chairman warns that a prolonged downturn might well inflict severe damage, especially to low-profits workers who include been hit hardest. Powell is delivering the first of two days of semi-annual congressional testimony, first on Tuesday to the Senate Banking Committee after which on Wednesday to the Home Monetary Companies Committee.

“The longer the downturn lasts, the larger the aptitude for longer-timeframe damage from permanent job loss and industrial closures,” Powell says in his Senate testimony. “Long intervals of unemployment can erode workers’ abilities and damage their job potentialities.”

He notes that the pandemic poses “acute risks” for runt companies.

“If a runt or medium-sized industrial turns into bancrupt since the economy recovers too leisurely, we lose bigger than real that industrial,” he says. “These companies are the coronary heart of our economy and on the general embody the work of generations.”

The chairman tells lawmakers, “We’re dedicated to the utilize of our stout fluctuate of tools to present a enhance to the economy and to back guarantee that the recovery from this sophisticated length would per chance be as out of the ordinary as attainable.”

In March, the Fed decrease its benchmark curiosity rate to a file low shut to zero. Closing week, it left the tempo at that stage and signaled that it anticipated to take rates at that stage via 2022.

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