Ben Bernanke, the former Federal Reserve chairman who served before and after the 2008 financial crisis, told CNBC on Wednesday the coronavirus economic halt is more like a “major snowstorm” than an economic depression.
“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.”
“This has some of the same feel of panic, some of the feel of volatility,” he said in a “Squawk Box” interview. “It’s really much closer to a major snowstorm or a natural disaster than it is to a classic 1930s-style depression.”
Bernanke said he does expect a “very sharp” U.S. recession, but also a “fairly quick” recovery.
Bernanke’s comments echoed what current St. Louis Fed President James Bullard said earlier on “Squawk Box.” Bullard believes the 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.
The St. Louis Fed president 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 Fed Chairman Jerome Powell and his team have been “extremely proactive” and “working really hard and got ahead of this.”
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.
However, Bernanke warned 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.