reply A V-shaped rebound in America's fragile recovery will be hard to come by in the short term

The US Federal Reserve kept the target range of the Federal Funds rate between zero and 0.25% local time Thursday. Most members of the Federal Open Market Committee expect that range to remain unchanged through 2022.Since the COVID-19 outbreak in the US, the Federal Reserve has repeatedly introduced easy monetary policy to support the economy and more government stimulus measures are in the pipeline. Still, the U.S. economy faces a long road to recovery, and a V-shaped rebound is unlikely to occur soon.America's economy may shrink by 6.5% this yearThe COVID-19 outbreak has posed significant difficulties to the U.S. economy, severely affecting economic activity, employment and inflation in the short term and posing "considerable" risks to the economic outlook in the medium term, the Federal Reserve said in a statement after its two-day monetary policy meeting.According to the Latest economic outlook released by the Federal Reserve on the same day, the US economy is expected to contract by 6.5 per cent in 2020, down sharply from the 2 per cent growth forecast in December. However, the Fed believes the US economy is on track to grow 5 per cent in 2021 and climb another 3.5 per cent in 2022.The Fed also expects the unemployment rate to rise to 9.3% this year, up 5.8 percentage points from its previous forecast. Unemployment is expected to remain high at 6.5 percent in 2021 and 5.5 percent in 2022. On the price front, U.S. inflation is likely to be just 0.8% this year, well below the Fed's 2% inflation target. Core inflation, which excludes food and energy prices, was also as low as 1 per cent, sharply revised down from a previous estimate of 1.9 per cent."The coVID-19 outbreak and controls have led to a sharp decline in economic activity and a surge in unemployment, particularly among low-income groups, women, African Americans and Hispanics," Fed Chairman Colin Powell said at a news conference. He said the decline in real GROSS domestic product in the second quarter of this year was probably the worst ever.The Fed's assessment of the U.S. economy is broadly consistent with international forecasts. The World Bank predicted in its latest global Economic Outlook report On Wednesday that the epidemic will cause the global economy to shrink by 5.2 percent by 2020, which would be the biggest decline since 1870. Developed economies are expected to contract by 7.0 per cent, while the US economy will contract by 6.1 per cent this year and rebound by 4 per cent next year. The World Bank also warned that forecasts could be revised down further if the uncertainty caused by the outbreak and business closures persists.The US economy officially entered a recession in February, ending more than a decade of expansion, according to a report released Friday by the National Institute of Economic Research.A V-shaped rebound will not happen quicklyThe US economy has rebounded and will "improve significantly" in the third and fourth quarters, US Treasury Secretary Steven Mnuchin said today. Speaking to reporters, White House economic adviser Scott Kudlow also cited the recent stock market rally and various indicators as evidence that the economy is turning a corner. After may's job Numbers picked up, Kudlow expects strong jobs reports for June and July.Despite the optimism of Mr Mnuchin and Mr Kudlow, there is still a long way to go. Despite a surprise improvement in May employment, the unemployment rate remained at 13.3 percent, the highest since World War II, and it is expected to take years to return to pre-epidemic levels.Jeffery Schultz, investment director and strategist at Kelly & Co, says this year will be the beginning of a recession in the US. Previous recessions have averaged 13 months, so this one is likely to last well into next year, with GDP likely to contract by a hefty 42 percent in the second quarter and worse in the third.The extent of the recession and the pace of recovery in the United States are highly uncertain, Powell said, and the outlook will depend largely on success in containing the spread of the epidemic and on policy actions taken by governments at all levels to support recovery after the crisis."A full recovery is unlikely until people are confident that it is safe to re-engage in a wide range of activities." Mr Powell has previously said publicly that the US economy will recover from coVID-19, but that the process could stretch out to the end of next year and depend on a vaccine. He has also said people should not be bearish on the U.S. economy, but should be careful not to expect a quick V-shaped rebound.More stimulus is controversialIn March, the Fed cut its target range for the federal funds rate to between zero and 0.25 per cent. In the face of a challenging economic recovery, the Fed pledged to use all its tools to support the U.S. economy and achieve its goals of maximum employment and price stability. Meanwhile, the Fed will keep its target range for the federal funds rate between zero and 0.25 per cent until it is confident that the crisis is over. All 17 members of the Federal Open Market Committee agreed that the target range for the federal funds rate would remain at an ultra-low level of zero to 0.25 per cent through 2020 and 2021. Most officials expect the range to remain unchanged through 2022.In addition, more government stimulus measures are still in the pipeline and need to be agreed.Mr Mnuchin and Mr Kudlow said on Sunday that the US had shown positive signs but was continuing to discuss another round of stimulus to boost economic recovery. Mr Kudlow told reporters at the White House that "there are many options". Earlier, US President Donald Trump said at a White House event to celebrate the non-farm payrolls report that he would ask Congress to pass more economic stimulus measures, including a payroll tax cut, even after Friday's unexpected improvement in US unemployment figures. The White House plans to spend as much as $1 trillion, a figure reportedly supported by Senate Majority Leader Mitch McConnell. In addition, Congress is debating whether to extend additional benefits for Americans who lost their jobs during the epidemic crisis.Mr. Mnuchin also said new guidelines would be issued to address issues such as the difficulty many small businesses have in obtaining loans because of technical glitches in the program and the millions of dollars that some well-capitalised public companies have received.But some Republicans question the need for more stimulus. At a Senate committee hearing Tuesday, Labor Secretary Scalia said it was time to scale back the subsidies. "The $600 benefit is a special measure to help Americans who have been shut out, and it should not be allowed to become an obstacle to restoring jobs as the country begins to restart its economy."Most economists say the recovery is still too fragile for the government to unwind its support for the economy. This view has found support within the Republican Party. "If the Trump administration and Senate Republicans start to remove these key pillars of economic support, this crisis will last much longer," Senator Wyden of Oregon said at the hearing. In addition, Ohio Senator John Portman is pushing a plan that would redirect stimulus rather than cut it off.