Bernanke likens economic hit from coronavirus to a natural disaster

Former Federal Reserve Chairman Ben Bernanke said the economic impact from the coronavirus outbreak in the United States is closer to a natural disaster than a “1930s-style depression.”

“The Great Depression, for one thing, lasted 12 years. It came from human problems, monetary and financial shocks that hit the system, hit the global system,” Bernanke said Wednesday on CNBC’s “Squawk Box.”

Bernanke explained that unlike the man-made trend seen in the Great Depression, the coronavirus pandemic is a sudden blow that impacts the way the average person participates in the economy.

“This has some of the same feel, some of the feel of panic, some of the feel of volatility you’re talking about. But it’s much closer to a major snowstorm or a natural disaster than it is to a classic 1930s-style depression. So, it’s quite different. Different tools are necessary,” he added.

Bernanke, who oversaw the Fed’s response to the financial crisis in the late 2000s, noted that no fiscal policy will ease an economic blow “if we don’t get the public health right.”

“I think the public health issue is the most important one,” he said. “If we can get that straight, then we know how to get the economy working again. Monetary and fiscal policy can do their thing. And we won’t have anything like the extended downturn we saw in — even I don’t think in the Great Recession much less the Great Depression of the ’30s.”

The former Fed chairman’s remarks came hours after the White House and Senate leaders struck a deal on an approximately $2 trillion stimulus package to shore up key areas of the economy.