Former U.S. Fed chair Yellen says impossible to know how deep this recession will be

Former U.S. Federal Reserve Chairwoman Janet Yellen said on Monday that the economic downturn caused by the COVID-19 pandemic has been "rapid and sharp," and it's impossible to predict the depth of the recession at this point.

"The downturn has been rapid and sharp and it's different than any we've ever experienced in America," Yellen, who served as Fed chair from 2014 to 2018, made the remarks at a webinar hosted by the Brookings Institution.

"Every indication so far suggests there will be a huge plunge in output in the second quarter," said Yellen.

She noted that the 3.3 million initial unemployment claims reported last Thursday suggest that the unemployment rate may have already spiked to 5.5 percent or so, up from 3.5 percent in February, which was a five-decade low.

"Frankly, it's impossible to know at this point how deep the recession will be. It depends critically on how long the period of social distancing lasts," said Yellen.

Yellen said the best-case scenario would be a V-shaped recession, but she is worried that damage may occur that could lead to a "prolonged recession," if containment measures lead to more layoffs and bankruptcies.