FED’s Daly Doesn’t Expect A Quick Recovery After Coronavirus

Posted Wednesday, April 15, 2020 by
Skerdian Meta • 2 min read

As coronavirus spread across the globe, countries started doing what China was doing and shut down one after another. As a result, the global economy has fallen in a deep recession, again the same what we saw in China in January/February, where manufacturing and services PMI indicator in particular, dived hard.

The global economy was already near recession even before the coronavirus hit us, but now the major economies of the globe are heading for the bottom after shutting down for more than a month. Although, since this is not a confidence crisis, like the one we saw in 2008-09, many analyst have predicted a V-shape recovery when the shut-down ends.

After all, most people will go back to work and they will want to enjoy life again after coronavirus, increasing spending, especially for services. But, FED’s Mary Daly doesn’t think so. She made some comments which are listed below:

San Francisco Fed president, Mary Daly, comments to the WSJ

  • Recovery path out of the virus crisis is unlikely to be a swift one
  • Doesn’t expect a V-shaped recovery
  • Expects something more like negative quarters of growth this year, then gradual return to positive growth next year
  • Even so, such a view depends on how the health crisis is going to play out
  • It will take time for governments to lift restrictions and people to regain confidence
  • Uncertainty is the central issue surrounding the economy’s future
  • Fed is committed to near-zero rates until after the crisis passes
  • Also until price pressures move higher and unemployment data reverse its course
  • Says that ‘very pleased’ with the market’s reaction to Fed measures
Apart form the v-shape recovery which Daly doesn’t think will come, nothing really stands out all too much in these comments, although once again it reaffirms that any recovery path is not certain as the global situation remains extremely fluid at this point in time.
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