Jerome Powell will be on CBS’ 60 Minutes this evening. The New York Times has a preview.
“This economy will recover; it may take a while,” Mr. Powell said in a preview of the CBS program “60 Minutes” that aired Sunday morning. “It may take a period of time, it could stretch through the end of next year, we don’t really know.”
“Assuming that there’s not a second wave of the coronavirus, I think you’ll see the economy recover steadily through the second half of this year,” he said. “For the economy to fully recover, people will have to be fully confident, and that may have to await the arrival of a vaccine.”
No Shocker
This is not a shocker although it is unusual for the Fed chair to be this blunt.
The message is warranted as the economic data has been nothing but grim.
- May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
- May 15: Retail Sales Plunge Way More Than Expected
- May 15: Industrial Production Declines Most in 101 Years
Fed Promotes More Free Money
The Fed cannot directly give money away so that burden falls on Congress.
In additional unusual moves, Fed Chair Jerome Powell and Minneapolis Fed President Neel Kashkari both asked for Congressional Action.
This is a sign of panic. I commented on May 14, Panic Sets In: Fed Promotes More Free Money.
The Fed seldom steps in with fiscal recommendations, especially more deficit increasing measures.
Mish
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The real problem with recovery is the demographics involved. The majority of discretionary spending is done by the very demographic that is most severely affected by the virus. It is the top 10% of the wealth demographic that does the majority of discretionary spending and that group is made up primarily of people over 50. Our service based economy relies on the spending of the top 10%
The fact is the over 50 age group no longer feels safe going out and doing the things they did before. The effect of that is that their spending no longer trickles down to the other 90%. Without the spending of the top 10%, the lower 90% lose a huge amount of their employment and ability to make purchases making the problem worse.
The best way to counter this issue is to begin to transform the economy back to durable goods manufacturing which has a much broader and diverse customer base.
Anyway, Dow 400K?
60 minutes and serious TV? The last time I watched 60 minutes was in the nineties, and each broadcast had at least one segment which could be described as slander disguised as investigative journalist. The only way, the program apparently avoided litigation was by labeling itself “entertainment”, and being lawyered up. However, the duped audiences never got to that point.
Zoom is Now Worth More Than the World’s 7 Biggest Airlines https://www.visualcapitalist.com/zoom-boom-biggest-airlines/
And JUST when the Fed was BEGINNING to see their efforts in 2009 beginning to penetrate into low and middle income neighborhoods.
Hilariously sad
The Fed has done nothing but penetrating anyone living in any neighborhood not exclusively populated by members of the useless, illiterate, sycophantic leeching classes, since it’s very inception. All without any lube.
That’s why The Fed was created, and that’s all it has ever done. And ever will do.
Just like if you don’t test, the number of cases will go down….
Just stop gathering data on the economy…
That’s the next step.
Coronavirus: Brazil overtakes Spain and Italy as new cases grow https://www.bbc.com/news/world-latin-america-52699165
Currently at #58 in cases per million though
Not that the data from anywhere is necessarily comparable.
If it really takes off in less organised countries it won’t be pretty , seems to be picking up in India, Africa, South America. The choices available to those besides population just taking care of itself are much less.
Brazil is doing about the same thing as Sweden. I wonder why it’s not working, and they had to dig all those mass graves?
I guess they don’t have “spare cremation capacity” unlike some other countries .
If they are fortunate they have some spare food capacity, likely only if their economies keep working. In the west people might lose their livelihood and all that goes with it, which is bad enough, in poorer countries they might literally starve.
It should be obvious that (1) population density in Sweden is much lower than Brazil and (2) the education level in Sweden is probably much higher than in Brazil, which means that the Swedes understood about maintaining some SD and even isolation, which is what intelligent people would do w/o government edicts anyway.
This is panic. People still have no idea yet.
Powell admits FED has failed miserably. Recovery May Stretch to the End of 2025
Total U.S. death rate for 2020 is below average, CDC says:
From the CDC’s own website:
YTD (May 9th) Deaths by Pneumonia/Flu: 87.4k
YTD (May 9th) Deaths by Coronavirus: 60.3k
Flu deaths here are modeled not actual reported. And you know how accurate models are. I saw 1 patient die from flu this year in my hospitals ( I work between 3 and I didn’t attend to this one;a co-worker did). I’ve seen at least six personal patients I’ve personally attended to die so far from COVID.My city size is 750k. Anecdotal as that may be it’s my own experience thus far. And we’ve only been at this total 3 months.
It’s hard to find the balance between exaggeration of and underestimation of this virus. Always good to be reminded in real terms, because that is what will help guide people at a personal level, which in my opinion counts more than any legislation.
That was a very dated article, and refers to data as of March 28th.
Fed hints at losing control? Can not print prosperity anymore?
I guess he’s telling everyone someone pissed in the punch bowl, but that’s all there is to drink.
In Spain this is called the New Normal
And even protesters are spaced out about it
youtube.com/watch?v=vJRbGkcq6Bw
The big question though is what happens when the government lets everyone go back to work, and millions no longer have a job to go to. I expect they are going to try to string this all out as long as possible, half way between opening the economy and supporting the rest, for the political leverage it might bring…in Spain at least…either that or they just have no idea so might as well pretend to have one, SimSpain for technocrats or something.
Powell should just tell people to buy stocks and flood the bond market with more money so there is a melt up in stock up prices. If people took their checks and buy stocks under this scenario he could get more hands into the human fund – money for people
We have bee recovering since 1913. When is it going to finally recover?
Recovering addict, emerging countries, etc, etc. Well at least no one can accuse us of having zero sense of humor.
He’s lobbying hard to get that 3 trillion passed. This proves what you’ve been saying all along Mish – it’s far worse than markets are recognizing. That last statement – for the economy to fully recover we may have to wait for a vaccine – is a direct contradiction to Trump’s statements about the recovery.
What is extremely disturbing about this is the fed speak part.
Fed speak is we expect the recovery to take until late 2021.
Decoded fed speak. We are about to enter a global depression and we may not be able to hold this together much longer.
Central bankers don’t say these kinds of things.
Excellent analysis.
FED Uncertainty Principle amendment — if they admit it’s bad, it’s 10x worse than that.
Looking like we need to invade somebody pretty soon to get those poll numbers straightened out…