May 17, 2020: The country’s economy has shrunk of 30% in Q2 but will avoid an economic plunge in the long run said Jerome Powell, Federal Reserve Chairman.
The experts say the jobless numbers will be something like it was in the 1930s when the rate peaked out at close to 25%. The current distress coupled with the dynamism of the U.S should have cover for a significant rebound.
Scott Pelley the host questioned whether unemployment is 20% or 25%, Powell said “I think there is a range of perspectives. But those numbers sound about right for what the peak maybe.”
He also quoted that the growth will be back and the economy would be stable in the third quarter. He also did mention that getting back to the position where we were at the end of the year would be difficult but the growth will be seen from the third quarter of 2020.
The current pandemic has made more than 36 million Americans filling unemployment claims over the last two months. The current unemployment in the U.S is 14.7% as per the report. The major difference from the depression is that the activist Fed and a congress has already spent $3trillion in rescue funds.
“In this case, you have governments around the world and central banks around the world responding with great force and very quickly. And staying at it,” Powell said. “So I think all of those things point to what will be — it’s going to be a very sharp downturn. It should be a much shorter downturn than you would associate with the 1930s.”
The Atlanta Federation mentioned that they have seen a GDP drop of 42% which is highest and never seen these types of numbers before.
Powell did not speculate on what shape the recovery would take but estimated that the U.S. ultimately will get to where it was before the virus hit — amid the longest expansion in U.S. history. He cautioned, though, that a full recovery may not happen until a vaccine is found for the coronavirus.
“So in the long run, I would say the U.S. economy will recover,” he said. “We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there. Source: CNBC
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