Jerome H. Powell, the Federal Reserve chair, struck a worried tone at his first regularly scheduled news conference since the coronavirus shuttered the United States economy, calling the job losses taking hold “heartbreaking” and predicting a long road ahead.
Mr. Powell, who had been presiding over the longest economic expansion on record, has watched as the strongest labor market in generations slipped away. More than 26 million workers have lost jobs as quarantines and lockdowns close businesses, sapping the fuel from a consumer-driven economy.
While much of that pain could prove temporary, the world’s most important economic leader sounded an alarm that the recovery could be slow and halting — and that the damage virus containment efforts have inflicted on the economy could be especially painful for the most vulnerable.
“We were hearing from low- and moderate-income and minority communities that this was the best labor market they’d seen in their lifetime,” he said. “It is heartbreaking, frankly, to see that all threatened now. All the more need for our urgent response, and also that of Congress.”
Mr. Powell promised that the Fed would push its powers to their limit to help the economy, keeping rates low and funneling credit into crucial markets. But he also made it clear that elected policymakers must do their part to keep households and businesses from falling too far behind, and underlined repeatedly that the stakes were high, particularly for the job market.
“Longer and deeper downturns have left more of a mark, generally,” Mr. Powell said. “That’s why the urgency in doing what we can to prevent that longer-run damage. It doesn’t have to be that way.”
Mr. Powell’s Fed has staged a whatever-it-takes response to the coronavirus crisis, slashing interest rates to near zero, rolling out a gigantic bond-buying program to soothe troubled markets and setting up a series of emergency lending programs to keep credit flowing to businesses and households.
Officials on Wednesday pledged to keep rates near rock bottom for the foreseeable future and to use their “full range of tools” to help the economy to climb back. But Mr. Powell stressed that the central bank could not perfectly counter the crisis at hand.
“Lowering interest rates cannot stop the sharp drop in economic activity caused by closures and other forms of social distancing,” Mr. Powell said. He later added that the Fed “can continue to be part of the answer,” but “it may well be the case that the economy will need more support from all of us.”
He highlighted the need for fiscal policies that protect businesses and households from “avoidable insolvency.”
The Fed’s announcement came just hours after a government report showed that the economy contracted at a 4.8 percent annualized rate in the first quarter. While that was the worst reading since 2008 and ended the record-long expansion, it probably barely scraped the surface of the coronavirus damage. Lockdowns started only toward the end of the quarter.
The contraction is expected to look even worse in the three months through June, but what will happen after that remains extremely uncertain. States and cities are tiptoeing toward a reopening, but that process could take months. It is also unclear when consumers will feel comfortable enough to return to shopping malls and concerts, let alone travel for work or pleasure.
Fed officials warned that the economy may be in for an unsteady journey back to growth and prosperity. Mr. Powell said second-quarter economic data would be “worse” than anything previously seen, that it might take consumers time to feel comfortable spending again, and that companies and workers might need additional financial help.
In their post-meeting release, Fed officials flagged “considerable risks to the economic outlook” over the medium term, suggesting central bank officials did not anticipate growth to bounce back quickly in the “V-shaped” recovery that President Trump and some other administration officials still seemed to expect.
“They are giving some insight into how they see the trajectory for the economy, which is not a V-shaped path,” said Michelle Meyer, head of U.S. economics at Bank of America. “They’ll keep interest rates low for a long time, they’ll err on the side of being more accommodative, rather than less.”
The central bank has some room to maneuver even with rates at rock bottom.
Congress has handed the Treasury Department $454 billion to back up Fed emergency lending programs, which can help businesses, states and cities gain access to credit. Less than half of that funding has been earmarked, and not all of the programs the Fed has announced are up and running yet.
Mr. Powell suggested on Wednesday that the Fed’s two corporate bond programs would begin buying debt soon, and that the Fed would lay out revised plans for its midsize business program, which is supposed to help companies that are too big for forgivable small business loans but too small to readily access capital markets.
But the central bank cannot make grants, and even its lending powers are constrained to fairly healthy borrowers.
Treasury Secretary Steven Mnuchin, who must sign off on the programs, has indicated that he is not willing to take risks that lead to major losses.
“I think it’s pretty clear if Congress wanted me to lose all of the money, that money would have been designed as subsidies and grants as opposed to credit support,” Mr. Mnuchin told reporters on Wednesday.
Mr. Powell indicated that he would defer to Mr. Mnuchin on matters of credit risk, but also said the Fed was ready to use whatever it had at its disposal, even if those abilities were somewhat limited.
“The path of it is highly uncertain, but we will be there with our tools, supporting the economy and supporting that recovery,” Mr. Powell said. “We can do what we can do, and we will do it to the absolute limit of our powers.”
Alan Rappeport contributed reporting.