In a rare television interview, Federal Reserve Chairman Jerome Powell told Today show co-anchor Savannah Guthrie the U.S. economy can’t reopen until the coronavirus pandemic is under control.
“The virus is going to set the timeline,” a grim-looking Powell said on the NBC morning show on Thursday.
Powell’s comments contradict President Donald Trump’s calls for “packed churches” on Easter, just over two weeks away. Easter Sunday would be a “beautiful timeline” for reopening the economy, Trump said at a press briefing at the White House on Tuesday.
The Fed chairman had a different outlook.
“The sooner we get the spread of the virus under control, people will regain confidence,” Powell said in the interview. “When they become confident that is the case, they will very willingly open their businesses up, go back to work, the consumer will be spending. So I think the first order of business will be to get the spread of the virus under control and then resume economic activity.”
The head of the central bank rarely gives sit-down interviews. He typically only speaks to reporters during formal press conferences after the Fed’s meetings to answer questions on monetary policy. During the financial crisis, as the U.S. teetered on the brink of a depression, Ben Bernanke, then chairman of the Fed, never took part in a TV interview.
While Guthrie asked Powell the obligatory question about an economic recession, and Powell affirmed the U.S. likely is experiencing a GDP contraction, that wasn’t the news. There is no major U.S. economic forecaster who isn’t projecting a recession.
However, the chairman’s projected it likely would be short, and the rebound sharp. The Fed pledged on Monday it would buy unlimited bonds and take other measures to keep credit flowing.
“This is a unique situation,” said Powell. “This is not a typical downturn” because it’s not due to an underlying weakness in the economy or instability in the banking system, he said.
Republican and Democratic state governors have issued “stay at home” orders for more than half the U.S. population, restricting activity to necessary tasks such as shopping for food. The goal is to slow the spread of the coronavirus to avoid overwhelming hospitals.
States with stay-at-home orders include Ohio, Michigan, Colorado, Connecticut, Massachusetts, Louisiana, Minnesota, New Jersey, New Mexico, New York and Utah. Other states, such as Texas and Pennsylvania, have issued restrictions in some counties.
Part of the reason people are being urged to stay at home is the breakdown in testing – in the absence of a quick way to know who is carrying COVID-19, people have to act as if anyone might be carrying the disease. Nations doing widespread testing, like Iceland, have found about half the people who test positive for the disease are showing no symptoms, yet are still contagious.
The way public health officials traditionally get epidemics under control is testing to identify and isolate the sick, tracking their contacts, and seeing if those people have been infected – much like South Korea handled the pandemic.
The U.S. and South Korea had their first cases of coronavirus detected on the same day. South Korea quickly ramped up to more than 10,000 tests a day, many of them in drive-through facilities, with most people getting their results within hours. The COVID-19 outbreak peaked in that nation of 51 million people on March 2 and has been in sharp decline since then, according to data from Johns Hopkins University.
In the U.S., testing for COVID-19 is still limited, and the disease is still on the upswing. Public health officials in many areas of the country have said in recent days that tests are restricted to health care workers and hospitalized patients because of a shortage of test kits, swabs to administer the tests, and protective equipment to keep safe the workers doing the testing. In most cases it takes days, and sometimes more than a week, to get results.
“We would tend to listen to the experts,” for setting a timetable to resume normal activity, Powell said in the NBC interview, citing Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases and a member of the White House Coronavirus Task Force.
Trump has nixed that type of sentiment, saying at a White House briefing on Tuesday that if public health experts had their way they would “shut down the entire world.” The president pointed out in a tweet on Tuesday that people are killed in car crashes, but the U.S. still allows driving.
“Look at automobile accidents, which are far greater than any numbers we’re talking about,” Trump said in the tweet. “That doesn’t mean we’re going to tell everybody, ‘No more driving of cars.’ So we have to do things to get our country open.”
In fact, while the White House issued guidelines recommending social distancing for 15 days to slow the spread of the coronavirus, Trump didn’t shut down any states, and it would be difficult for him to force unwilling governors to rescind those orders.
Powell said in the Today interview it’s better to rely on the experts.
“We’re not experts in pandemics over here,” he said, referring to the Federal Reserve. “We don’t get to make that decision. I would say that we would tend to listen to the experts.”