The US economy should rebound fairly quickly when businesses reopen after the coronavirus lockdown ends, said Federal Reserve Chairman Jerome Powell this morning.
Just how quickly the economy can reopen following the outbreak, however, is dependent on the path of the virus, Powell said on a Brookings Institute webinar this morning.
One way or another, the second quarter will be a weak one, he said: “We do expect to see very low economic output and big increases in initial claims and unemployment.”
While the Fed has no influence on the government’s fiscal policies, Powell said we are likely to see more fiscal support from Washington.
This is what the great fiscal power of the US is for, to protect the people the best we can from the hardships they’re facing,” Powell said. “At the Fed, we do all we can to shepherd the economy through this difficult time.”
This morning, the central bank announced another $2.3 trillion loan package.
The Fed is flexible on when all of its support programs will end, Powell said. Once they get wound down, this would be done gradually.