Fed’s Powell Says U.S. Must Get Virus Under Control Before Economy Restarts

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Jerome H. Powell, the Federal Reserve chair, said during a rare television interview on Thursday that the United States “may well” be in a recession already, but that it should get the coronavirus under control before getting back to work.

“The first order of business will be to get the spread of the virus under control, and then to resume economic activity,” Mr. Powell said, speaking on NBC’s “Today” show. “The virus is going to dictate the timetable here.”

Mr. Powell’s comments contrast those of President Trump, who has suggested that he wants many Americans to get back to work as soon as Easter, less than three weeks away, and that efforts to slow the spread of the virus by shuttering large parts of the economy should not be worse than the disease itself.

The coronavirus pandemic is inflicting enormous economic damage in the United States, as quarantines close businesses, force workers to stay at home, and create uncertainty that has spurred volatility in financial markets. Mr. Powell and his colleagues have been taking aggressive measures to shore up the economy, and he used his first major interview since the crisis began to underline what they are doing — and why.

“You may well see significant rises in unemployment, significant declines in economic activity,” Mr. Powell said, adding that eventually the economy would bounce back, helped by central bank policy. “We want to make that rebound as vigorous as possible.”

His comments came shortly before data on jobless claims were released, underlining just how painful efforts to contain coronavirus have been for America’s businesses and employees. Nearly 3.3 million people filed initial jobless claims last week, a massive surge from 281,000 the prior week and more than four times the previous record high.

While the economic fallout from coronavirus is sure to be severe, causing what many expect to be the biggest single-quarter drop in United States growth on record, Fed officials have said that they are trying to put the economy into position so that it can snap back once the pandemic ends and the world returns to work.

To do so, central bankers want to ensure that American households are well-placed to borrow and spend once the economy begins its recovery. They cut interest rates to near-zero over the course of two emergency meetings this month to make credit cheaper.

Officials are also trying to prevent the financial system from melting down amid extreme market volatility. The goal is to keep financing easily available to businesses, which could help to tide them through the current dry spell. If too many companies fail and shed workers permanently, the downturn could become much more protracted.

The Fed committed to buying as many government bonds as necessary to soothe markets after ruptures appeared in Treasury and housing debt. It has intervened aggressively in the market for short-term loans between banks to keep that corner functioning smoothly, and it is using its emergency lending powers to backstop corporate bonds.

The aid legislation working its way through Congress will give the Fed money to ramp up those lending programs. The central bank had already announced facilities to help large corporations, small businesses and money market funds, backed by a Treasury Department fund containing $94 billion.

Now, it can scale up those programs with Treasury agreeing to take initial losses on any loans that go sour. Treasury Secretary Steven Mnuchin has estimated that the financing, $454 billion, could support more than $4 trillion in Fed operations.

“When it comes to this lending we’re not going to run out of ammunition,” Mr. Powell said. “That doesn’t happen.”

Mr. Powell’s appearance at a fraught economic moment recalled a similar one by Ben S. Bernanke, then the Fed chair, during the depths of the 2007 to 2009 recession.

Mr. Bernanke appeared on “60 Minutes” in March 2009, six months after Lehman Brothers filed for bankruptcy and seven before the unemployment rate would peak at 10 percent. Fed chairs never appeared in television interviews at the time, making it a momentous attempt to reassure the American people.

“I think we’ve averted that risk,” Mr. Bernanke said when asked if the country was headed into a new Great Depression. “Now the problem is to get the thing working properly again.”

Mr. Powell’s chairmanship has been much more open, and he has done previous broadcast interviews — but never one so targeted at mass consumption as the “Today” show. He too brought words of reassurance, if not of certainty.

“Really the message is this: that this is a unique situation, it’s not like a typical downturn,” Mr. Powell said Thursday. “The Federal Reserve is working hard to support you now, and our policies will be very important when the recovery does come.”

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