- Presidents of Federal Reserve Banks in major U.S. cities have spoken out about the poor federal response to the pandemic, saying it eliminates any potential for a rapid economic recovery.
- The president of the San Francisco Federal Reserve said on Wednesday that the economy may never recover from the pandemic – and eliminating aid like $ 600 unemployment benefits underscores that alone.
- On the same day, the president of the Boston Federal Reserve said that the U.S. response to the virus has been “inconsistent” and that economic activity is unlikely to increase until Americans no longer feel threatened by the virus.
- Similarly, the president of the Dallas Federal Reserve said people “should follow protocols like wearing masks” because the resurgence of the virus this summer has led to a “subdued” economic recovery.
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The coronavirus pandemic has decimated the US economy in just a few months. More than 56 million Americans have filed for unemployment in the last 21 weeks. Carmen Reinicke of Business Insider previously reported that unemployment claims were faster than the $ 37 million submitted during the 18-month Great Recession.
The road to economic recovery is expected to last for years – and now the country’s central bankers are beginning to talk about how that recovery has been further hampered by the coronavirus’ federal response.
Most recently, Congress failed the incentive package that expired at the end of July. With negotiations seemingly open, President Donald Trump is submitting a series of executive actions of dubious legitimacy to temporarily extend certain incentive clauses.
Mary Daly, the president of the Federal Reserve Bank of San Francisco, told reporters on Wednesday that Congress should agree on a new stimulus package because the U.S. economy insisted they would never return from the pandemic, according to the Financial Times.
“It is quite possible that we will not return, at least in certain sectors in the same way as before,” she said. “That will mean that a large number of workers will not be able to return to the same jobs they had before the pandemic.”
Central bankers in other major U.S. cities have echoed Daly’s statements.
Eric Rosengren, president of the Federal Reserve Bank of Boston, slammed the country’s pandemic response to coronavirus in a Wednesday virtual meeting with the South Shore Chamber of Commerce in Massachusetts, according to The Wall Street Journal.
“Limited or inconsistent efforts by states to control the virus based on public health guidance not only put citizens at unnecessary risk of serious illness and possible death, but are also likely to prolong the economic downturn,” he said.
He noted that as long as the virus poses “significant threats to public health”, “economic activity will not increase, as individuals” avoid voluntary activities that endanger their health. “He stated that stricter restrictions on economic activity in Europe at the height of the virus in the spring allowed successful resumption of retail and recreation and a rapid period for economic recovery.
Daly also pointed out to the U.S. government that on July 31, unemployment would disappear as an example of the inconsistent response that the economy will eventually continue to falter. Letting go of the $ 600 unemployment benefit “potentially creates a bit of a gap in consumer spending,” she said. As Congress debates the next round of incentives, millions of Americans will struggle to end meetings – let alone increase consumer spending by the amount needed to support the economy.
Robert Kaplan, president of the Federal Reserve Bank of Dallas, said the recent resurgence of the coronavirus “rooted” the economic recovery in virtual comments to the Lubbock Chamber of Commerce on Wednesday. Recovery support “requires protocols, especially wearing masks,” he said. “If we do not follow that, although people may feel freer, the economy will grow more slowly.”
