Powell: "Recession May Last Until End of Next Year... Vaccine Development Is Key"

Economic Recovery in the US Expected but May Take Time
Kindly Explains COVID-19 Economic Impact and Recovery Efforts on Terrestrial Broadcast
Communicates with Public, Not as an Expert
Supports Concerns over Economic Reopening without Vaccine
Reiterates "Will Do Whatever It Takes" and Requests Political Support

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), expressed concerns that the economic recession caused by the novel coronavirus disease (COVID-19) could continue until the end of next year. He also emphasized that vaccines are the key, suggesting that if vaccine development is delayed, the recession could last even longer.

In an interview with CBS's "60 Minutes" aired on the 17th (local time), Powell said, "To fully recover the economy, complete confidence is needed," adding, "We may have to wait until the vaccine arrives." While mentioning the potential of the U.S. economy and expecting a full recovery, he also said, "It will probably take some time for now, and it could last until the end of next year, but no one knows."

The "60 Minutes" interview aired that day was reportedly pre-recorded on the 13th. On the same day, during a virtual meeting of the Peterson Institute for International Economics (PIIE), he issued a strong warning, stating, "If Congress and the White House do not provide additional support, an unprecedented economic downturn will permanently damage the economy."

His remarks in the interview are interpreted as a caution against hastily expecting a V-shaped rebound. Bloomberg News evaluated Powell's mention that the economic recovery process could continue until the end of next year as a careful attempt not to promise a rapid rebound of the U.S. economy. While many experts forecast that the U.S. economy will begin to recover from the second half of the year, Powell showed a very cautious attitude toward the possibility of a "V-shaped recovery."

What Powell particularly worried about in the interview was the possibility of a second wave of the pandemic. He said, "If a second wave occurs, it will inevitably cause significant damage not only to the economy but also to public trust," calling it "a risk factor we really want to avoid."

This implies that it will be difficult for the economy to fully restart without the premise of a vaccine. Although the whole world has jumped into vaccine development, visible results have yet to emerge. According to AP News and others, British Prime Minister Boris Johnson wrote in an op-ed published in the Sunday Mail that day, "We said we would use every means to develop a vaccine, but there is still a long way to go," adding, "Honestly, the vaccine may not bear fruit."

Because of this, Powell maintained the position that public health and safety should take priority over rushing to revive the economy. He said, "When the public gains confidence in safety, they will go outside," expressing the view that the more social distancing is maintained, the faster the economy can reopen.

Regarding the U.S. unemployment rate, Powell predicted, "It will rise until June. After that, it will start to decline," and reiterated the Fed's commitment to using all available means to rebuild the economy.

Powell's appearance on a U.S. terrestrial broadcast program is his third since taking office, two of which occurred after the COVID-19 outbreak. The Wall Street Journal (WSJ) evaluated, "Powell's interview was aimed more at the general public than Wall Street." It can be interpreted as delivering a message to citizens not to rush economic reopening but to focus more on quarantine efforts. WSJ diagnosed, "The Fed was criticized during the 2008 financial crisis for focusing only on supporting the financial sector rather than the real economy," adding, "Now it is explaining in simple terms what it is doing to help Americans."

Powell also specifically explained the industries affected by COVID-19. He mentioned, "Entertainment businesses or travel industries, which involve large audiences, will face particularly special challenges." At this point, footage was shown of Powell visiting a sports stadium with his wife.

This content was produced with the assistance of AI translation services.