Daily Management Review

Fed Policymakers Say US Economy And Job Market Will Not Show A ‘V’ Shaped Recovery”


Fed Policymakers Say US Economy And Job Market Will Not Show A ‘V’ Shaped Recovery”
According to officials of the United States Federal Reserve, a quick return to growth should not be expected by Americans even as many parts of the largest economy of the world start to reopen after weeks of lockdowns which has managed to slow down the spread of the coronavirus pandemic in the country but has had a record impact on jobs.
 “A couple months ago I was optimistic, I was hopeful, that maybe we would have a ‘V’-shaped recovery - shut things down, clamp down on the virus, and then have a quick recovery,” Minneapolis Federal Reserve Bank President Neel Kashkari said in an interview on the PBS Newshour.
Covid-19, the disease that is caused by the novel coronavirus, has infected more than 1.3 million people in the US and has killed more than 77,000 even as it has continued to spread across the nation.
Bur with a vaccine and effective treatment for the disease not likely till for about a a year or two, “we are in for unfortunately a slow, long recovery” from “devastating” job losses, Kashkari said.
A Labor Department report showed Friday, the lockdowns imposed by states and local governments to curb the spread of the novel coronavirus resulted in a loss of 20.5 million jobs in the US economy in April.
The jobs will be back, the US president Donald Trump said in an interviewed with Fox News on Friday. “They’ll be back very soon, and next year we are going to have a phenomenal year,” he said.
However the Fed does not share this view in its entirety even as the agency has cut interest rates to zero. As a stimulus to the economy, the Fed has also bought trillions of dollars of bonds while also extending credit to local governments and businesses in order to stop implosion in the financial markets and in preventing the economy from getting worse.
The unprecedented actions of the Fed which include an almost $3 trillion committed by the U.S. Congress for rescue efforts, should help to revive the job market and the economy, said San Francisco Fed President Mary Daly, in an interview to on CNN on Friday.
“What I’m hoping in the baseline is we can come back safely, we listen to public health officials, we take it slow but gradual...if we do those things and we reenter safely, then I expect us to have positive growth in 2021,” Daly said.
She was asked whether it could take up to 10 or 12 years to regain the pre pandemic levels for jobs in the US as had happened after the 2007-2009 global financial crisis that emerged from the US, she said, “I’m working night and day to ensure that doesn’t happen.”
But she said that there can be no quick recovery for the economy – not as long as the virus is still loose.
“When the coronavirus is behind us, we can reengage fully,” Daly said, noting. “It won’t be quick; in my opinion, it won’t be ‘V’-shaped, it will be gradual.”