Fed's Powell: U.S. may be in recession, control of virus to dictate timing of economy reopening

WASHINGTON - 26 March 2020: The United States “may well be in recession” but progress in controlling the spread of the coronavirus will dictate when the economy can fully reopen, Federal Reserve chair Jerome Powell said Thursday in an interview on NBC’s Today Show.

“We are not experts in pandemic... We would tend to listen to the experts. Dr. Fauci said something like the virus is going to set the timetable, and that sounds right to me,” Powell said, in reference to Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases who is on the White House’s coronavirus task force.

“The first order of business will be to get the spread of the virus under control and then resume economic activity.”

The aim of the trillions of dollars in lending and bond purchases the Fed has authorized over the past two weeks is precisely to let an otherwise healthy economy pause long enough to control the virus, he said, before what could be a strong rebound later in the year.

“The sooner we get through this period and get the virus under control, the sooner the recovery can come...We know that economic activity will decline probably substantially in the second quarter but I think many expect and I would expect economic activity to resume and move back up in the second half of the year,” Powell said.

The U.S. central bank chief’s rare appearance on a nationally broadcast morning show comes as officials worldwide try to cope with both a health crisis and the deep economic fallout from it. Later on Thursday morning the U.S. Labor Department will release data on claims for unemployment insurance, which are expected to skyrocket due to “social distancing” and mandated shutdowns of many businesses across the country.