Former Fed chief Bernanke sees bad year, no quick recovery

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FILE PHOTO: Former Federal Reserve Chairman Ben Bernanke speaks during a panel discussion at the American Economic Association/Allied Social Science Association (ASSA) 2019 meeting in Atlanta, Georgia, U.S., January 4, 2019. REUTERS/Christopher Aluka Berry

SAN FRANCISCO (Reuters) – The U.S. economy could shrink 30% or more this quarter as stay-at-home orders aimed at slowing the coronavirus outbreak choke off business, and it could be a couple years before the economy regains its footing, former Federal Reserve Chair Ben Bernanke said on Tuesday.

“Overall, it could be a very bad year for the economy,” Bernanke said in a Brookings Institution online event, though he added that so far the fiscal and monetary policy responses have been pretty good, and more will still be needed.

“There are things we can do to open up the economy, significantly perhaps, but I don’t see the economy returning to a more normal state until there’s much greater confidence … that opening up the economy won’t restart the crisis.”

Still, he said, history suggests the recovery will be considerably shorter than that which followed the 2007-2009 financial crisis. “The U.S. economy will recover and within a few years will show only modest marks of this experience,” he predicted.

Reporting by Ann Saphir; Editing by Paul Simao