Less than a week after Powell tried (and apparently failed) to convince the market negative rates aren't coming to the US (right as the BOE's Andy Haldane admits the UK is considering joining the rest of Europe into the monetary twilight zone of NIRP), and just days after the Fed's semiannual Financial Stability report warned that "asset prices remain vulnerable to significant price declines should the pandemic take an unexpected course" traders will again be glued to their TVs at 7pm ET on Sunday evening when chair Powell sits down on CBS's 60 Minutes - a little under 10 years after Ben Bernanke used the same venue to laughably declare that the Fed "could raise interest rates in 15 minutes if we have to," adding "that time is not now" or apparently not ever - and will urge Americans to be patient as a full recovery may take until the end of 2021, and would require a coronavirus vaccine for people to "be fully confident" again.
The question is when, of course, and it is here that Powell's message gets decided more downbeat: "Assuming there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of the year,” the central bank chief said. Yet even if the recover does start as soon as Q2, "it may take a while. It may take a period of time. It could stretch through the end of next year [before things get back to normal]. We really don't know."
However, he added that "for the economy to fully recover people will have to be fully confident, and that may have to await the arrival of a vaccine."
To be sure, Powell has achieved great success in restoring the stock market. Alas, as everyone knows by now, the market is not the economy, and more than 36 million Americans have lost their jobs since February as the economy shuttered to limit virus spread, even as the S&P500 is rapidly recovering virtually all of its losses. Meanwhile, countless companies, especially small businesses, are hurtling toward bankruptcy, while states and cities are confronting gaping budget shortfalls that could provoke a massive second wave of layoffs from the public sector.
"I would take a more optimistic cut at that, if I could," Powell said, unable to take an optimistic cut. "And that is — this is a time of great suffering and difficulty. And it's come on us so quickly and with such force, that you really can't put into words the pain people are feeling and the uncertainty they're realizing. And it's going to take a while for us to get back."
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