As market crashes again, ex-Fed head thinks coronavirus could trigger a U.S. recession

Another day, another steep triple-digit loss in the stock market.

While the Dow Jones has shown some signs of rebounding, the index is still deep in the red. Simply put, unless you own coronavirus stocks, you are losing a ton of money right now.

The situation may be improving in China, but the outbreak is beginning to touch North America and Europe.

How bad can Covid-19 be for the economy? Some think this is a blip in the radar, and others think it could bring the U.S. into a recession.

Speaking at a Michigan event, former Federal Reserve Chair Janet Yellen warned that the virus could serious affect Europe and then put America into a recession.

“We could see a significant impact on Europe, which has been weak to start with, and it’s just conceivable that it could throw the United States into a recession,” she said.

“If it doesn’t hit in a substantial way in the United States, that’s less likely. We had a pretty solid outlook before this happened — and there is some risk, but basically I think the U.S. outlook looks pretty good.”

In the end, Yellen believes the central bank will come to the rescue.

“Market participants will look to the Fed to provide some support,” Yellen said. “In most developed countries, interest rates are really low — and they are very low in the United States, but higher than they are in most other developed economies. And the Fed does have some scope — it’s not a cure-all. But it will provide a little bit of support to consumer spending and to the U.S. economy and for financial markets. And, of course, if it becomes very serious, fiscal policy could play a more active role too.”

Time for some quarantative easing.