US economy ‘could contract 30pc’ over virus
WASHINGTON, May 18: The world's biggest economy faces a severe downtown but will not suffer another Great Depression, US Fed chief Jerome Powell said on Sunday, as three hardest-hit countries in Europe reported low death tolls and lockdowns eased.
The US economy could "easily" collapse by 20 to 30 percent this quarter, and unemployment could peak at 20 to 25 percent, but, "it should be a much shorter downturn than you would associate with the 1930s," Powell, the Federal Reserve Chairman, said on CBS's "60 Minutes."
In the United States, too, with more than 30 million jobs destroyed, states have begun reopening even though federal guidelines for a two-week decline in cases have not always been met. Jerome Powell added in a CBS interview that the economic downturn might last until late 2021, and a full rebound may not be happen until a vaccine is found.
However, he expressed confidence the economy would recover, and said he would never bet against the US economy. Earlier this week, Powell had called on US lawmakers to pass more economic stimulus and relief aid.
More than 36 million Americans have filed for unemployment benefits since mid-March. Powell said: "This is a time of great suffering and difficulty... you can't really put into words the pain people are feeling.
"This economy will recover. It may take a while," he said. "It could stretch through the end of next year. We really don't know." Unemployment could potentially peak at 25%, and "the lowest paid people" - particularly women - were being hurt worst by the downturn, he added.
The US has already approved nearly $3 trillion (£2.5tn) in new stimulus spending - packages worth an estimated 14% of the country's economy. The Fed has also taken radical steps to shore up the economy, pumping trillions of dollars into the financial system.
On Friday, Democrats in the House of Representatives passed an additional $3tn coronavirus relief package. However, it is not expected to pass the Republican-majority Senate, where leader Mitch McConnell has argued there is "no urgency" to act.
Meanwhile, US Health and Human Services Secretary Alex Azar has defended the decision by most states to begin lifting the lockdown measures. He told CNN that the decisions should be made by local leaders, because "in almost half of our reporting counties, we have had not a single death", and over 50% of cases came from just 2% of those counties.
Only 14 US states have met the federal recommended guidelines for reopening - which suggest a decline in new cases daily for two weeks - according to a study by Reuters.
Italy recorded the fewest deaths from coronavirus, 145, in one day since its two-month lockdown began, while Spain had 87 new virus-related deaths -- the first time the number has fallen below 100 in two months.
Restaurants, bars and cafes will be among the businesses allowed to reopen from Monday in Italy, and Spain will also further relax its lockdown measures, except in Madrid and Barcelona.
Britain also registered its lowest daily increase since late March, with 170 fatalities. However, that number did not include Northern Ireland due to a technical issue -- and these figures are often lower on weekends due to lags in reporting.
With a worldwide virus death toll above 315,000 and the global economy reeling from the vast damage caused by stay-at-home orders, numerous European countries are lifting restrictions to provide much-needed respite for their beleaguered and impatient populations
Weekend leisure-seekers enjoyed reopened beaches in France, Greece and Italy, and Britons basked in sunny parks.
On Sunday, the United States also recorded its lowest daily death toll in a week, at 820, but the country with the world's highest number of coronavirus fatalities neared 90,000 dead.
Elsewhere, the virus -- which has infected 4.7 million people globally -- is still surging.
Brazil's number of deaths soared past 16,000 with more than 240,000 infections, making it the country with the fourth-highest number of cases.
On the other side of the Atlantic, South Africa reported 1,160 new infections, the highest daily number since March when the country recorded its first case.
A semblance of normality returned to the sports world on the weekend, in the United States, Europe and Asia. A NASCAR motor race before empty stands at the Darlington Raceway in South Carolina was the sport's first live competition since March 8.
In South Korea, the world's first big-purse post-coronavirus golf tournament -- the Korean LPGA Championship -- wrapped up Sunday.
Germany's Bundesliga at the weekend became the first top football league to return after lockdown, bringing relief not only to European football fans but to a sports-starved world. Defending champions Bayern Munich defeated Union Berlin 2-0 inside an empty stadium in the capital on Sunday evening. -AFP