Covid-19 Damage Is Expensive And May Be “Long-Term”

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The US Federal Reserve Chairman warned on Wednesday that Coffid-19’s damage to the US economy may be “long-term,” explaining that urgent aid plans in this framework are “costly” for sure, but are inevitable to avoid a major recession.
Jerome Powell said in a speech: “Additional budget support may be costly but worth the effort if it permits to avoid long-term economic damage and allows us to achieve a stronger recovery.”
He said, “The current slowdown is unique, as it is due to Covid-19 and the measures taken to contain it.”
To date, Congress has provided $ 2900 billion in budget support for families, institutions, health care providers, states, and local municipalities, “that is, about 14% of gross domestic product.”
Powell stressed that “the recovery may take time before it accelerates,” adding that additional assistance is likely to be needed to combat the effects of the emerging corona virus.
He explained that “the size and speed of the recession is unprecedented” in contemporary history “in the worst recession since the Second World War.”
He declared that the gains made in the employment sector in the past decade had evaporated. In less than two months, the country lost more than 20 million jobs.
Powell referred to a Federal Reserve study to be published Thursday that shows that among the people who had a job in February before the outbreak of the epidemic, “about 40% of families whose breadwinners earn less than $ 40,000 a year lost their jobs in March.” He added that the lives of these individuals changed suddenly and their future prospects are murky.





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