Fed Chair Jerome Powell says the greatest risk to the US economic rebound is another wave of the coronavirus

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus,  in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque
U.S. Federal Reserve Chairman Jerome Powell  speaks in Washington

  • The US economy is about to start growing “much more quickly,” Federal Reserve Chairman Jerome Powell told CBS.
  • The biggest risk to the economic recovery is another surge in coronavirus cases, Powell said.
  • He credited steady vaccinations, stimulus, and strong monetary policy for the rebounding economy.
  • See more stories on Insider’s business page.

Federal Reserve Chairman Jerome Powell says the US economy is about to start growing “much more quickly,” but a resurgence in COVID-19 cases could derail that progress.

Powell discussed the US economic recovery from the coronavirus pandemic with CBS’ Scott Pelley, in an interview set to be aired on 60 Minutes Sunday at 7 pm ET.

In a preview of the interview, Powell said the US economy is at an “inflection point” more than a year after the virus forced widespread lockdowns, tangling supply chains, shuttering businesses, and leaving millions of Americans unemployed.

Powell said the economy is picking up steam “because of widespread vaccination and strong fiscal support, strong monetary policy support.”

“We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly. The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people can continue to socially distance and wear masks,” Powell told CBS.

The March jobs report showed positive signs, adding 916,000 nonfarm payrolls, well-exceeding economists’ expectations. The unemployment rate fell to 6% from 6.2%, matching forecasts, still far above the 3.5% pre-pandemic rate.

While businesses reopen and hiring appears to be surging, many employers have said they are struggling to fill vacant jobs, especially in the restaurant and retail sectors, which took a huge hit last year.

Powell earlier this month said some people may struggle to reacclimate to an economy permanently changed by the pandemic, adding the Fed will continue to provide support to prevent scarring and persistent unemployment.

“The real concern is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work,” he said in the conference. “It’s important to remember we are not going back to the same economy, this will be a different economy,” Powell said in a virtual conference hosted by the International Monetary Fund.

Powell and experts have also cautioned that another wave of the coronavirus could unwind economic progress.

Even as vaccinations continue to roll out in the US at a steady pace, confirmed cases of COVID-19 in the US have again been on the rise. The director of the Centers for Disease Control and Prevention last month warned of “impending doom” and a possible fourth surge of the virus, spurred by variants.

On Saturday, an Israeli study found coronavirus variants first found in South Africa and the UK are able to partially “breakthrough” the Pfizer/BioNTech vaccine. The study has not yet been peer-reviewed.

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Bridgewater founder Ray Dalio says the US is on the ‘brink of a terrible civil war’ because of wealth gaps and political partisanship

Ray Dalio
Ray Dalio.

  • Bridgewater Associates founder Ray Dalio tweeted Sunday that the US could fall into a “terrible” civil war if its political and economic challenges aren’t addressed.
  • “Our country is still in a terrible financial state and terribly divided,” he wrote.
  • He called on Democrats and Republicans to work together to address the wealth gap, government debt, and political partisanship. 
  • Visit Business Insider’s homepage for more stories.

Bridgewater Associates founder Ray Dalio said on Sunday he believes the United States could devolve into a “terrible civil war” if political, economic, and social divisions aren’t addressed.

“I believe we are on the brink of a terrible civil war,” the hedge fund billionaire wrote in a series of Twitter posts.

“We are at an inflection point between entering a type of hell of fighting or pulling back to work together for peace and prosperity,” he said. “Our country is still in a terrible financial state and terribly divided.”

Dalio’s stark assessment comes as the US faces enormous challenges, including the pandemic-induced economic crisis, income inequality, deep political divides, and massive government debt. It also comes weeks after a mob of supporters of former President Donald Trump stormed the US Capitol, fueled by baseless allegations of voter fraud in the presidential election. Five people died in the violence, and dozens of rioters have been arrested.

Read more: Hedge fund billionaire Ray Dalio warns that political and wealth gaps in the US could lead to conflict – and even ‘a form of civil war’

Dalio had praise for newly sworn-in President Joe Biden, saying he was “thrilled to hear what President Biden said at his inauguration. It is consistent with the direction history has shown the country needs to move in.”

During his inaugural address, Biden called for unity among Americans and said “democracy had prevailed” after the unprecedented attempt to reverse the results of the presidential election and the storming of the Capitol. 

This was not the first time Dalio has warned that the US could fall into a kind of civil war if political and wealth gaps aren’t addressed. 

He has often warned that a lack of opportunity, income divides, and under-investment in education could cause irreversible damage. 

“I’ve studied the last 500 years of history and cycles: large wealth gaps with large values gaps at the same time that there’s a lot of debt and there’s an economic downturn produces conflict and vulnerability,” he told CNN’s Poppy Harlow in an interview aired last month.

Dalio also likened the recent exodus of CEOs and companies from business hubs like New York and San Francisco to Florida and Texas as a sort of “civil war.” 

“We’re seeing a form of civil war: people are leaving to go from one place to another, partially for taxes, but also partially for other reasons,” he said in December. “The worst alternative is that one side or another says, ‘This isn’t my country anymore. This isn’t my population.'”

On Sunday, Dalio said both Democrats and Republicans need to bring about change.

“Good words and spirit aren’t enough,” he wrote. “People will have to agree on both how to grow the pie and how to divide it well. That will require revolutionary change.”

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