Jay Powell warns US recovery could take until end of 2021
Federal Reserve chair Jay Powell has warned that the US economy may not “fully recover” until there is a vaccine for Covid-19, and possibly not until the end of 2021.
“Assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year,” Mr Powell told CBS News in an interview that aired on Sunday. “So, for the economy to fully recover, people will have to be fully confident. And that may have to await the arrival of a vaccine.”
Mr Powell said the economy would eventually recover, but “it may take a while . . . it could stretch through the end of next year, we really don’t know”.
US president Donald Trump said last week that he hoped to have a coronavirus vaccine in production by the end of the year. But public health experts, including Anthony Fauci, the head of the US National Institute of Allergy and Infectious Diseases, and Rick Bright, the recently ousted head of the US Biomedical Advanced Research and Development Authority, have warned the process is likely to take longer.
Dr Fauci, a high-profile member of Mr Trump’s coronavirus task force, has said he expects the search for a vaccine to take at least a year to 18 months. Mr Bright told Congress last week that he thought Dr Fauci was being too optimistic.
Mr Powell said last week that “additional policy measures” might be needed from the Fed and fiscal authorities to prevent greater long-term damage to the US economy.
The Fed’s crisis-fighting measures, including cuts in base interest rates to near-zero and a series of special programmes to supply liquidity, have led to sharp rebounds in financial markets from lows in late March.
But economic data remain bleak. US unemployment surged to a postwar high of 14.7 per cent in April, with more than 36m Americans filing for unemployment benefits since the coronavirus pandemic first spread to the world’s largest economy.
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