Powell warns of sustained recession due to virus

Fed urges action to prevent long-lasting economic damage.

By

World News

May 13, 2020 - 10:04 AM

Federal Reserve Board Chairman Jerome Powell. Photo by Alex Wong/Getty Images/TNS

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell warned Wednesday of the threat of a prolonged recession resulting from the viral outbreak and urged Congress and the White House to act further to prevent long-lasting economic damage.

The Fed and Congress have taken far-reaching steps to try to counter what is likely to be a severe downturn resulting from the widespread shutdown of the U.S. economy. But Powell cautioned that widespread bankruptcies among small businesses and extended unemployment for many people remain a serious risk.

“We ought to do what we can to avoid these outcomes,” Powell said.

Additional rescue aid from government spending or tax policies, though costly, would be “worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” he said.

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