FILE PHOTO: Raphael Bostic, President of the Federal Reserve Bank of Atlanta walks into the three-day “Challenges for Monetary Policy” conference in Jackson Hole, Wyoming, U.S., August 23, 2019. REUTERS/Jonathan Crosby
May 5, 2020
WASHINGTON (Reuters) – The pace and shape of the U.S. economic recovery when the novel coronavirus outbreak abates is still highly uncertain and will vary across the country, Atlanta Federal Reserve President Raphael Bostic said on Tuesday.
“There are lots of different possibilities,” Bostic said of the shape of any recovery, noting that in the first instance it hinges on stabilizing the infection rate.
More than 95% of Americans had been under “stay-at-home” or “shelter-in-place” orders to curb the spread of the virus, but about half of all U.S. states have now at least partially lifted shutdowns in a bid to reopen their economies, despite rising infections in some areas.
Several U.S. central bank officials have said it is difficult to predict the nation’s economic future while the outbreak is not yet contained.
“What I would say is right now it is very hard to know with any degree of certainty which ones are more or less likely. In many communities the ‘V’ recovery is going to be very difficult to achieve,” Bostic said in a webinar, referring to a scenario where there is a swift economic bounce back.
“But across the country there has been a fair amount of diversity of experiences, diversity of vulnerability, and that will translate into diversity of recoveries.”
The U.S. economy contracted in the first quarter at its sharpest pace since the 2007-2009 Great Recession due to the stringent control measures, which shuttered non-essential businesses and have put at least 30 million people out of work.
The United States has the world’s highest number of confirmed cases of COVID-19, the respiratory disease caused by the coronavirus.
Bostic also said there should be a focus on making sure any recovery is broadly shared across income and racial groups, noting that those with low incomes made up a disproportionate number of essential workers.
“Many of the essential jobs are low-paying jobs … we’re going to have to collectively think about how do we make sure that the people who have put themselves at risk through this are not just discarded once we get to the other side,” he said.
Asked about whether the Paycheck Protection Program had adequately served minority businesses, Bostic noted that the federal program to help small businesses had been designed by Congress with an emphasis on speed.
The program, part of an economic relief package that is now approaching $3 trillion, has been criticized for technical glitches and an uneven disbursement of funds, with underserved communities finding access more difficult due to a lack of prior relationships with the program’s lenders.
“I think there’s more to be done,” Bostic said, adding that it was a conversation to be had with lawmakers in Congress.
(Reporting by Lindsay Dunsmuir; Editing by Chris Reese and Paul Simao)