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Fed Chairman Says U.S. ‘May Well Be in a Recession’ after Coronavirus Leads to Record One-Week Unemployment Numbers

Federal Reserve Chairman Jerome Powell arrives to speak to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world’s largest economy from the impact of the coronavirus, in Washington, March 3, 2020. (Kevin Lamarque/Reuters)

Federal Reserve Chairman Jerome Powell admitted Thursday that the U.S. economy may be slipping into a recession but said the long term outlook will depend on how quickly the coronavirus pandemic is contained.

“We may well be in a recession,” Powell said on NBC. “But I would point to the difference between this and a normal recession. There is nothing fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.”

Powell also assured that the Fed will not be depleted of resources due to its now near-zero interest rates and expansive bond-buying program.

“When it comes to lending, we are not going to run out of ammunition. That just doesn’t happen” the central bank chief said. “We still have policy room in other dimensions to support the economy.”

The Fed introduced a wave of unprecedented stimulus measures this month, including slashing interest rates, pledging to buy unlimited bonds, and credit programs for companies as businesses struggle to remain afloat while the coronavirus outbreak slashes economic activity around the country.

Powell added that the Fed is focusing on aiding “places where credit is not being offered where it should be offered.”

“We can step in and make that happen. That’s a very positive thing and appropriate thing in this highly unusual situation we’re in,” the chairman said.

Unemployment claims spiked to a record high of 3.28 million, surpassing the peak of the Great Recession peak of 665,000 claims in March, 2009 as well as the record high of 695,000 in October, 1982.

Powell was coy on whether he agrees with President Trump’s hope that the economy could roar back to life by Easter, April 12.

“We’re not experts in pandemics over here. We don’t get to make that decision. I would say that we would tend to listen to the experts,” Powell said.

The U.S. currently has more than 68,500 cases of coronavirus and by Thursday close to 1,000 had died after contracting the respiratory illness, which originated in China. New York reported 100 more deaths on Thursday for a total of 385 fatalities in the state.

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