(Bloomberg Opinion) -- Federal Reserve Chair Jerome Powell made two things clear during much-anticipated remarks on Wednesday. First, fiscal policy might need to do more to combat the lasting economic damage from the coronavirus pandemic. Second — in what markets were most eager to hear — he’s not about to steer the central bank down the path to negative interest rates.“The evidence on the effectiveness of negative rates is very mixed,” Powell said Wednesday in a webinar hosted by the Peterson Institute for International Economics. To hammer home the point: “This is not something that we’re looking at.”“It’s an unsettled area, I would call it,” he said. “I know that there are fans of the policy, but for now it’s not something that we’re considering. We think we have a good toolkit, and that’s the one we’ll be using.”What was left unsaid, of course, is that one such fan is President Donald Trump, who tweeted on Tuesday that...
(Bloomberg) -- Get ready for the New Normal 2.0 -- or, more appropriately, 2-point awful.The U.S. economy post-Covid-19 will look a lot like the one that struggled to recover from the 2008-09 financial crisis –- only in some ways worse.Growth will be disappointingly tepid after an initial rebound and, for a time at least, inflation dangerously lower and unemployment heartbreakingly higher than they were back then. Government debt -– and the Federal Reserve’s balance sheet -– will be much bigger, while interest rates stay low.“Our economy will have lost something of value,” said Nobel Prize-winning economist Joseph Stiglitz. “We will be scarred, and the recovery will be slow.”The New Normal 2.0 will be a just-in-case economy of diminished demand and paltry productivity as consumers and companies emerge from this crisis gingerly and build buffers against the next.Households worried about their health and finances will save more and spend less. Companies will...
