Ben Bernanke, the former Federal Reserve chairman who served before and after the 2008 financial crisis, told CNBC on Wednesday that the coronavirus economic halt is more like a natural disaster than a classic depression.
“It’s really much closer to a major snowstorm or a natural disaster than it is to a classic 1930s-style depression,” he said in a “Squawk Box” interview. He acknowledged, “This has some of the same feel of panic, some of the feel of volatility.”
“[But] this is a very different animal than the Great Depression,” Bernanke stressed. “The Great Depression, for one thing, lasted for 12 years, and it came from human problems: Monetary and financial shocks that hit the system.”
Earlier Wednesday, current St. Louis Fed James Bullard told “Squawk Box” the U.S. economy is facing a huge shock to the system over the near-term, but it will then bounce back strong after worst of the outbreak passes.
Bullard said this week the nation’s unemployment rate would skyrocket to 30%, higher than it was even during the Great Depression.
However, he tempered those remarks on CNBC, saying that while the near-term damage will be daunting, it’s largely an intentional hit due to efforts to combat the spread of the coronavirus. It will be unwound quickly, he added.
Bullard and his fellow central bankers have taken extraordinary steps during the pandemic, pushing short-term borrowing rates to near-zero and pledging asset purchases with no limit to support markets.
Bernanke said Wednesday that “if we don’t get the public health right” there’s no Fed monetary policy or White House and Capitol Hill fiscal package that’s going to work.
Early Wednesday, the Trump administration and Senate leaders struck a deal on a $2 trillion coronavirus economic relief bill. The Senate is expected to vote and pass it later Wednesday.
This is a breaking news story. Check back shortly for updates.