In remarks he plans to deliver Tuesday (June 30) before the House Committee on Financial Services, Powell said output and employment "remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” he said, per the report.
In Powell's opinion, the full recovery is not likely so long as people are afraid to go out for fear of catching the coronavirus.
He said the path forward would also hinge on the coordinated response from lower levels of government in states and cities.
In recent days, the coronavirus began to spike back up again after several weeks when states began to reopen their economies and allow more public gatherings, albeit with social distancing rules in place. But that doesn't seem to have helped, with several states reporting record high rates of infections.
“We have entered an important new phase and have done so sooner than expected,” he said. “While this bounceback in economic activity is welcome, it also presents new challenges — notably, the need to keep the virus in check.”
The Fed has introduced programs to try and offset the economic decline, such as cutting its benchmark short-term loan rate to near zero.
Powell said the loan rate will remain at that level until the economy has recovered.
Speaking earlier in June, Powell cautioned not to underestimate the continuing economic hurt on Americans even as businesses began to reopen.
At the time, he said the downturn, depending on how long it continues, risked causing serious long-term damage. For instance, he said long-term unemployment could have ripple effects such as diminishing workers' prospects and skills for jobs in the future.