Federal Reserve Chairman Jerome Powell warned Tuesday of “significant uncertainty” as the US seeks to recover economically from the coronavirus pandemic.

During testimony before the Senate Banking Committee, Powell said that while there have been signs of economic improvement, the decline in US GDP this quarter “is likely to be the most severe on record,” and the country is facing the daunting challenge of drawing down unemployment that is up about 10% compared to pre-pandemic levels.

The US has lost 20 million jobs since March when the outbreak was first detected in the US, and unemployment continues to hover around 13%.

If the biting downturn is not reversed, Powell warned, “the downturn could further widen” economic inequality, noting that black Americans, Hispanics and women have borne the brunt of job losses.

“The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery,” Powell said in opening remarks.

“Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely,” he added.

Wall Street quickly seized on Powell’s warnings, with all three indices nearly erasing earlier gains driven by positive trial results that appear to show a cheap and widely-available steroid is helping COVID-19 patients recover, as well as a spike in US retail sales.

But indices recovered, with the Dow up more than 400 points in mid-day trading and the S&P 500 and Nasdaq each posting gains of more than 1%.

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