MNI TRANSCRIPT: Powell on Outlook, Timing of Recovery

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference Wednesday:

     Q: I want to get more expansion on the timing of recovery and the

connection between the health response, you said earlier that you felt the

second half of the year could see a robust rebound. Is that now out of the

question? Do you think a steady recovery is really possible, until a vaccine is

developed, given the patchwork of measures we see taken around the states, is

that going to lead us to a steady path out absent a vaccine.

     A: Economic forecasts are always uncertain. Today they are unusually

uncertain and that is really because so much of the performance of the economy

depends on the path of the virus, and the success of the measures we take to

control it. Our success in reopening the economy, and also the time it takes to

develop new drugs. In our tools the things that we do don't affect any of those

things. We are not experts on those things, either. But what the experts tell us

is that the outcomes are highly uncertain. This is an unusually new kind of

uncertainty added on top of our regular uncertainty. But I will say, I think

there are a few things that you can say about the path ahead.

     First, this time now is going to be a time of sharp contraction in economic

activity, high unemployment, personal consumption expenditures have declined,

business investment as well, unemployment moved up. We are going to see economic

data for the second quarter that is worse than any data we have seen for the

economy. There are direct consequence of the disease and measures we are taking

to protect ourselves from it. We will enter the new phase, and we are just

beginning to maybe do that, where we will formal measures that require social

distancing will be rolled back, gradually, and at different paces in different

parts of the country, and in time, during this period, the economy will begin to

recover. People will come out of their homes, start to spend again, we will see

unemployment go down, we will see economic activity pick up. When will that be?

It's very hard to say. But say for this purpose that it's in the third quarter,

as I mentioned earlier, that could be a fairly large increase, given the size of

the fall, the increase could also be substantially large, although it's unlikely

that it would bring us quickly, quickly all the way back to pre-crisis levels.

This is the period as well that carries the risk of new outbreaks of the virus,

something we want to avoid.

     I think then, after that period, at some point you will have the kind of

formal social distancing measures will be gone but you will still be left with

probably a level of caution on the part of people who will worry, and probably

keep worrying for some time, you would think that behavioral change, as people

gain confidence, so the sooner we get the virus under control, the sooner people

can regain that confidence, and regain their economic activity. Trying to be

precise about when that might happen and what the numbers might look like is, I

think it's very tough to do that.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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