Ben Bernanke, the former chairman of the Federal Reserve, is a scholar of the Great Depression, a background he put to use during the global financial crisis when he invented many of the emergency lending programs the central bank is now reusing.
But he thinks the Great Depression is a bad comparison to make to the current economic nosedive caused by the shutdowns in reaction to the coronavirus pandemic.
“People have made comparisons to the Great Depression. It’s not a very good comparison. The Depression was 12 years long,” he said at a presentation on Tuesday sponsored by the Brookings Institution, where he is a fellow-in-residence.
“This is like a natural disaster, and the response is more like an emergency relief than it is a typical stimulus or anti-recessionary response.” He said he was “pretty pleased” with the fiscal and monetary responses.
Bernanke’s prognosis for the economy was pretty grim, however, saying gross domestic product on an annualized basis could fall by 30% or greater in the second quarter. He raised the prospect the economy could be partly opened up in the summer and closed back down again in the fall.
“So overall, it could be a very bad year for the U.S. economy,” said Bernanke.