Economic recovery “may take some time to gain momentum,” Fed Chair says
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Federal Reserve Chair Jerome Powell told CBS’ “60 Minutes” that he thinks it might take until the end of next year, 2021, for the economy to recover, with a lot depending on the timing of a vaccine.
Before the U.S. economy can crawl out of this economic hole, first Powell expects the hole will get deeper. He said unemployment will likely increase through June, with as many as 1 in 4 working Americans potentially out of work at the peak of this.
Powell said we should start to see a reversal in the second half of the year — but not the so-called V-shaped recovery, or a quick return to normal.
“I would say the main thing is to get back on the road to recovery. And I think that can happen relatively soon,” Powell said. “Likely to happen in the second half of the year. That’s a reasonable expectation. After that, the path is going to depend on a range of things.”
Powell also said that timeline depends on the country avoiding a second wave of viral infections and more shutdowns.
So, if things don’t get better fast, is there more the Fed can do? Powell said there is, such as increasing lending to businesses.
“We’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have,” he said.
One thing the Fed probably will not do? Go to negative interest rates, according to Powell. President Donald Trump supports the idea, but Powell was dismissive, saying there’s mixed evidence they’re helpful.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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