U.S. Federal Reserve Chair Janet Yellen speaks during a news conference in Washington D.C., the United States, on Dec. 13, 2017. (Xinhua/Yin Bogu)
"Frankly, it's impossible to know at this point how deep the recession will be. It depends critically on how long the period of social distancing lasts," said Yellen.
WASHINGTON, March 30 (Xinhua) -- Former U.S. Federal Reserve Chairwoman Janet Yellen said on Monday that the U.S. economic downturn stemming from the COVID-19 pandemic has been "rapid and sharp," and it's impossible to predict the depth of the recession at this point.
"The downturn …is different than any we've ever experienced in America," Yellen, who served as Fed chair from 2014 to 2018, made the remarks at a webinar hosted by the Brookings Institution.
"Every indication so far suggests there will be a huge plunge in output in the second quarter," said Yellen.
She noted that the 3.3 million initial unemployment claims reported last Thursday suggest that the unemployment rate may already have spiked to 5.5 percent or so, up from 3.5 percent in February, which was a five-decade low.
The street and sidewalk of Times Square are seen mostly empty in New York, the United States, March 26, 2020. (Photo by Michael Nagle/Xinhua)
"Frankly, it's impossible to know at this point how deep the recession will be. It depends critically on how long the period of social distancing lasts," said Yellen.
"The hope is that lockdown can be lifted in May and activity will begin to normalize in the early summer. But a longer period of confinement certainly seems possible," said the former Fed chair.
Noting that the best-case scenario would be a V-shaped recession, she said she is worried that damage may occur that could lead to a "prolonged recession," if containment measures lead to more layoffs and bankruptcies.
A monitor shows the trading information at the New York Stock Exchange (NYSE) in New York, the United States, March 12, 2020. (Xinhua)
Commenting on the U.S. administration's monetary and fiscal policy to cushion the economic fallout, Yellen said the Fed, with its "rapid and enormous" response, has done almost everything possible to ease financial conditions and support the economy.
On the fiscal front, the 2.2-trillion-dollar package is very "significant" and will provide a great deal of support to households and businesses, she said while voicing her concerns over its implementation.
Noting that many of the measures are temporary, Yellen said Congress will certainly have to do more if the shutdown is prolonged. ■
