Fed Officials Caution About Delay in Economic Recovery in the US
Fed officials maintain that economic recovery in the US will remain slow until the pandemic is brought under control in the country.
Amid a continued rise in coronavirus cases, Fed officials maintain that economic recovery in the US will remain slow until the pandemic is brought under control in the country. The US economy had shown signs of speedy recovery during May and June, which slowed down in July amid a result in cases and lockdown restrictions in certain states.
According to Boston Fed President Eric Rosengren, consumer spending – a key driver of economic growth in the US, could linger at low levels amid social distancing norms and caution among citizens to step out. Meanwhile, growth in employment also slowed down in July, possibly driving higher unemployment levels, which could further impact consumer sentiment adversely.
Meanwhile, San Francisco Fed President Mary Daly highlighted concerns about the unemployment benefits which expired recently and their impact on economic recovery. Daly stated, “It creates the potential for a hole, a little bit of a hole, in consumer demand and consumer spending. We have evidence that suggests they were spending those resources to pay rent or to buy food or to buy other consumer goods.”
Dallas Fed President Robert Kaplan commented that Americans will have to learn to live with the virus by taking necessary precautions line using masks and following social distancing. Kaplan estimated they unemployment levels in the US could remain around 9% by year-end, and any reduction in these levels will depend on how businesses and consumers take steps to contain the spread of the virus.
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