Read Date: 11/2020, Source
- Dr. Ben S. Bernanke sounded largely hopeful, noting that if the U.S. can get the virus under control within the coming months, likely with the help of a vaccine, the economy might recover quicker than it did from the last downturn.
- The reasons include a fundamentally sound financial system this time around and aggressive action by the Federal Reserve.
1. The Fed’s monetary policy alone won’t be enough to alleviate the pain inflicted by the pandemic on the leisure and services sectors.
2. Another reason Bernanke feels that a second stimulus round is needed is to help state and local governments maintain essential services.
3. Bernanke is not overly concerned about the amount of spending the federal government will have to undertake to deal with the pandemic as long as it eventually comes back to normal functioning.
4. Low interest rates will continue to drive demand for housing.
5. The Fed has limited capacity to help commercial mortgage borrowers who are currently struggling with delinquencies because of unpaid rents.
6. Bernanke believes the solution to many cities’ housing crisis lies in expanding supply. “Like most economists, I think rent control has some serious drawbacks,” he noted.
7. For the next four years, Bernanke predicts “status quo” for the agencies (they will not be privatized).
8. Economic damage from the pandemic might last into 2022.