novel coronavirus
novel coronavirus

The economic fallout from the coronavirus outbreak is “much closer” to the disruptions caused by a “natural disaster” rather than the Great Depression of the 1930s, former U.S. Federal Reserve Chairman Ben Bernanke said on Wednesday.

“This is a very different animal than the Great Depression,” Bernanke, a pre-eminent scholar of the Great Depression and distinguished fellow at the Brookings Institution, said in an interview with CNBC.

“The Great Depression, for one thing, lasted 12 years. It came from human problems, monetary and financial shocks that hit the system,” he said.

While the current situation “has some of the same feel” of panic and volatility, “it’s much closer to a major snowstorm or a natural disaster than it is to a classic 1930s style depression,” said Bernanke, who led the Fed through the 2008 global financial crisis.

The former Fed chairman predicted that the U.S. economy could have a “very sharp” recession in the next two quarters, but followed by a “fairly quick rebound.”

“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” he said.

Bernanke stressed the importance of getting the coronavirus epidemic under control before putting people back to work.

“It is important that before we put everybody back to work that we feel like we have the public health situation under control,” he said. “I would just like to emphasize that nothing is going to work, the Fed won’t help, fiscal policy won’t help if we don’t get the public health right.”

Bernanke’s remarks came after U.S. President Donald Trump said Tuesday that he wanted the U.S. economy to open back up in about three weeks, even as the number of COVID-19 cases continues to climb in the country.

“We don’t want to put people back to work when the public health situation is still in bad shape because people start getting sick, the hospitals get overflowing, and then people will isolate themselves and the thing will not sustain,” Bernanke said.

“So I think the public health issue is the most important one. If we can get that straight, then we know how to get the economy working again. Monetary and fiscal policy can do their thing,” he added. Enditem

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