Business shutdowns could easily cause the US economy to crash by up to 30 per cent this quarter, Federal Reserve Chairman Jerome Powell said on Sunday.
Mr Powell said unemployment could peak at 25 per cent, in levels not seen since the Great Depression of the 1930s.
But he said the economy could quickly rebound if there were no second wave of the Covid-19 pandemic.
"Assuming there's not a second wave of the coronavirus, I think you'll see the economy recover steadily through the second half of this year," Mr Powell said.
He said the downturn was not a result of deep-seated financial instabilities but a health crisis.
“In the long run, and even in the medium run, you wouldn’t want to bet against the American economy," Mr Powell said.
"This economy will recover. And that means people will go back to work. Unemployment will get back down. We'll get through this."
More than 36 million people have applied for unemployment benefits in the two months since the coronavirus first forced US businesses to close down and cut staff. The unemployment rate has so far reached 14.7 per cent.
Mr Powell told CBS that comparisons to the Depression were not really justified, but said the recovery “could stretch through the end of next year".
“Certain parts of the economy will find it very difficult to have a lot of activity," he said.
"The parts that involve people being in the same place, very close together. Those parts of the economy will be challenged until people feel really safe again.
“We will start our recovery and get on that road, and that’ll be a good thing. But it’ll take some time to pick up steam."