WASHINGTON (AP) – Federal Reserve Chairman Jerome Powell warned Tuesday that the U.S. economy faces a deep downturn with “significant uncertainty” about the timing and strength of a recovery. He cautioned that the longer the recession lasts, the worse the damage that would be inflicted on the job market and businesses.
In testimony to Congress, Powell stressed that the Fed is committed to using all its financial tools to cushion the damage from the coronavirus. But he said that until the public is confident the disease has been contained, “a full recovery is unlikely.” He warned that a prolonged downturn could inflict severe harm – especially to low-income workers who have been hit hardest.
Powell delivered the first of two days of semi-annual congressional testimony to the Senate Banking Committee before he will address the House Financial Services Committee on Wednesday. Several senators highlighted the disproportionate impact of the viral outbreak and the downturn on African-Americans and Latinos. Powell expressed his agreement.
“The way the pandemic has hit our economy… has been a real inequality-increaser,” the chairman said, because low-wage service jobs have been hardest hit and are disproportionately held by minorities. “That’s who’s bearing the brunt of this.”
He noted that the pandemic also poses “acute risks” for small businesses and their employees.