On Sunday, May 17, Jerome Powell, Federal Reserve Board Chair, was interviewed on the TV show, 60 Minutes. “The Fed” is a governmental body in charge of interest rates and money in our economy.

President Donald Trump, wanting a new person to lead the Fed, nominated Powell in 2018, but since then, has been critical of his work. Trump has been pushing hard to lower interest rates further while Powell wants to take a more moderate approach.

Then, in February of 2020, the pandemic hit. In Sunday’s interview, Powell said that the pandemic is the biggest threat to the economy and a long recession.

Recently, when Powell gave a speech on the economy, the Dow Jones went down 500 points. When asked in the interview which economic metrics he is using to measure the economy, Powell said, “Medical metrics are more important than economic metrics. One has to do with the other”.

While Congress was creating a stimulus policy, the Fed passed $3 trillion to assist Banks and Businesses. Last week, Powell said, “The real risk is if people are out of work for a long time, people’s careers could be lost. They can become insolvent”.

Powell believes, however, that the economy is geared for a second half comeback, though full momentum may not occur until next year. “Congress must keep businesses solvent,” he said. “You would not want to bet against the U.S. economy.”

“To fully recover, a vaccine is needed. Lots of things can move ahead and open, but some, like sporting events and concerts, will be challenged,” he added. “Second quarter Gross Domestic Product (GDP) will shrink by 30 percent, and unemployment will be 25 percent.”

So, was this the same as the 1929 Great Depression or the 2009 financial housing collapse? “We had a healthy economy two months ago so the downturn will be hard, but moderate growth will start in the third quarter,” Powell said. “Lowest-paid people, making $40,000 or less, have the most to lose. As we go into the summer, all states should be ‘open’ in some capacity.”

While we believe Powell’s statements might shake up some of the global economy, we also believe he has been very accurate in his thought process. For example, remember before the pandemic, unemployment was at 4.5 percent.

Based on Powell’s thinking, it will take massive spending on all elements of our economy to bring Powell’s current projected unemployment rate of 25 percent back down to pre-pandemic levels.

We do believe, however, that between the Fed and Congress, much needed stimulus has been put in place to “restart” our economy again, as our United States attempts to reopen. So, if you’re in the stock market, hold tight and get ready for a second half rebound.

Professor Anthony Rivieccio, MBA PFA, is the founder and CEO of The Financial Advisors Group, celebrating its 24th year as a fee-only financial planning firm specializing in solving one’s financial problems. Mr. Rivieccio, a recognized financial expert since 1986, has been featured by many national and local media including: Kiplinger’s Personal Finance, The New York Post, News 12 The Bronx, Bloomberg News Radio, BronxNet Television, the Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Co-Op City News, The Bronx News, thisisthebronX.info and The Bronx Chronicle. Mr.  Rivieccio also pens a financial article called “Money Talk”. Anthony is also currently an Adjunct Professor of Business, Finance & Accounting for both, City University of New York & Monroe College, a Private University. You can reach Anthony at 347.575.5045.