ST. PAUL — The head of the Federal Reserve Bank of Minneapolis said Thursday, April 2, that economic turmoil caused by the coronavirus pandemic has "almost certainly" pushed the U.S. into a recession.
How quickly the country can bounce back from the developing financial crisis depends on how long it takes to bring the pandemic under control, bank president Neel Kashkari said. The sooner that happens, he said, the sooner that scores of laid off workers can return to their old jobs and the less disruptive a recession will be.
But more and more businesses will go under the longer the pandemic lasts, he said, and the longer economic recovery will take.
Kashkari's comments during a web forum broadcast Thursday illustrate how little time it took for the pandemic to turn the U.S. economy on its head. Just last November, at a Minnesota Chamber of Commerce meeting, Kashkari said that a recession did not appear to be in the cards.
Waves of business closures and stay-at-home orders have been issued since then in a bid to contain the spread of COVID-19, the respiratory illness caused by the novel coronavirus. Those mandates have had the effect of historic job losses; the U.S. Department of Labor reported Thursday that more than 10 million Americans have filed for unemployment insurance in just the past two weeks.
More than 200,000 claims have been submitted so far in Minnesota alone. In South Dakota, meanwhile, 6,600 claims were filed last week, with North Dakota filing more than 12,500 in that same span of time.
Despite those figures, Kashkari still said he was optimistic that the U.S. could still rebound quickly.
"One thing we know from 2008, when you had millions and millions of Americans losing their jobs, it took more than a decade to put the labor market back together," Kashkari said. "I’m really pleased that a lot of the action by the federal government and the state governments has been focused on trying to keep workers in their jobs."
Kashkari and other officials on the webcast said the Paycheck Protection Program will hopefully allow businesses to keep their employees on payroll. Enacted last week as part of the $2 trillion federal stimulus plan, the program is intended to pump up to $350 billion in forgivable loans out to small business to preserve cash flow and payrolls.
The program could be especially critical for area not-for-profit businesses. Minnesota Council of Nonprofits lobbyist Marie Ellis said during Thursday's webcast that non-profit organizations that self-insure for unemployment will not be able to absorb the cost of mass layoffs.
In another sign of distress, Minnesota officials announced Thursday that they would ask the White House for a major disaster declaration that they say will funnel federal dollars toward mental healthcare during the crisis.
"People are fearing for their health. They are worried about how they are going to make ends meet," state Homeland Security and Emergency Management director Joe Kelly said in a statement. "Just the simple disruption to our regular routine is hard for us all."