Federal Reserve Chairman Jerome Powell said in a “60 Minutes” interview that the U.S. economy could take more than a year to recover from the coronavirus-induced shock. He conceded that jobless numbers will look a lot like they did during the Great Depression, when the rate peaked out at close to 25%.
- The Key: Powell cautioned that the public would need to stay vigilant to avoid a second wave of infections, “that would be quite damaging to the economy and also to public confidence… that’s a risk we really want to avoid.” He noted that the nature of the current distress coupled with the dynamism of the U.S. and the strength of its financial system should pave the way for a significant rebound.
- Be Smart: Powell challenged the idea that there is a trade-off between economic growth and protecting the public’s health. “When the public is confident that it’s safe to go out, they’ll go out. That’s why there’s no trade-off here.” The more that the public takes serious social distancing measures, “the sooner we can open up the economy.” He cautioned that it would be hard for the public to be fully confident until there is a vaccine.
- Stating the obvious: The Fed Chairman noted that economic activity that depends on large public gatherings, including entertainment and travel, could be especially challenged, according to the WSJ.
- Retail sales suffer rapid drop: The measure of purchases at stores, restaurants, and online fell in April by a seasonally adjusted 16.4% from a month earlier, the biggest drop since record-keeping began in the early 1990s, the Commerce Department said Friday. The exception was sales at non-store retailers — a category that includes internet merchants such as Amazon — which grew 8.4% month-over-month.