Tags: Coronavirus | Financial Markets | bernanke | sharp | recession | quick | rebound

Bernanke: 'Very Sharp' Recession, Followed by 'Fairly Quick' Rebound

By    |   Wednesday, 25 March 2020 09:05 AM

Former Federal Reserve Chairman Ben Bernanke predicted the U.S. economy is heading into a sharp recession that shouldn’t last.

“It is possible there’s going to be a very sharp, short, I hope short, recession in the next quarter because everything is shutting down of course,” he told CNBC.

“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” Bernanke later added.

Bernanke said that the coronavirus economic halt is more like a natural disaster than a depression.

“It’s really much closer to a major snowstorm or a natural disaster than it is to a classic 1930s-style depression,” he said.

“This has some of the same feel of panic, some of the feel of volatility,” he said.

″[But] this is a very different animal than the Great Depression,” Bernanke stressed. “The Great Depression, for one thing, lasted for 12 years, and it came from human problems: Monetary and financial shocks that hit the system.”

He also said that he thinks the current members of the central bank acted with appropriate force.

“I think the Fed has been extremely proactive and Jay Powell and his team have been working really hard and got ahead of this,” he said.

“Right now, I think that going big is right and I think the markets will absorb the Treasurys and the Fed will help keep that market working in a smooth way.”

Meanwhile, President Donald Trump said on Tuesday that he wants to wind down “social distancing” and reopen the U.S. economy after his 15-day strategy to slow the spread of the virus ends next week.

“I would love to have it opened up and just raring to go by Easter,” he told a Fox News “virtual town hall.”

White House senior economic adviser Larry Kudlow acknowledged that the administration doesn’t have the power to order a return to work. “We don’t exercise any monolithic authority but guidance is very important,” he told reporters on Tuesday, Bloomberg reported. “Public health also requires a good economy,” Kudlow said. “It’s not ‘either-or.’ The two have to work together.”

However, Wells Fargo Securities senior economist Mark Vitner sees slow going when work finally does resume. “Economic activity will ramp up fairly slowly as supply chains will take some time to normalize,” he said.

Vitner gives Trump the benefit of the doubt and says Trump is mainly trying to get the discussion going: “The president is right in starting the discussion about getting back to work. Establishing mileposts, benchmarks and criteria for ending the shutdowns and returning to work will remove some of the uncertainty present in the economy today,” he said.

That’s exactly the point, said Stephen Moore, an ally of Trump’s and advocate of an early return to work by America.

“I like the idea of a date certain,” he said. “One of the reasons the stock market has crashed is that people don’t know how long this is going to last,” said Moore, whom the president once considered nominating to the board of the Federal Reserve and is now an economist with FreedomWorks.

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Former Federal Reserve Chairman Ben Bernanke predicted the U.S. economy is heading into a sharp recession that shouldn’t last.
bernanke, sharp, recession, quick, rebound
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2020-05-25
Wednesday, 25 March 2020 09:05 AM
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