The U.S. economic recovery should continue, but depends on people using masks to slow the spread of the coronavirus and eventual deployment of a vaccine, Philadelphia Federal Reserve president Patrick Harker said on Tuesday.
With the economy currently growing faster than initially expected since a recession took hold last spring, Harker said continued growth “depends on a sustained decline in the rate of new infections — probably a result of nearly universal mask-wearing, especially indoors — that ensures only sporadic new outbreaks,” Harker said in webcast comments to the Official Monetary and Financial Institutions Forum.
He said he is also “assuming that a vaccine becomes widely available sometime mid to late next year.”
Several vaccines are already in trials, but their success and the speed of deployment is not guaranteed. The U.S. as well is far from suppressing the spread of the virus or even agreed on the protocols for mask wearing.
Harker said that while the health crisis continues, federal elected officials need to renew government aid “commensurate” to the problems faced by unemployed workers, small businesses and other hardest hit by the recession. The policymaker said he is assuming there will be at least another $1 trillion in fiscal stimulus as part of his economic forecast, and says GDP will go down by several tenths without it.
Even if the recovery continues and a new surge of the virus is avoided, “employment, unfortunately, probably won’t be back to pre-pandemic levels until 2023,” Harker said. Given the high levels of joblessness, “I would urge lawmakers to consider providing additional support soon.”
The economic recovery could resemble a bumpy “Nike swoosh,” with growth going up and down based on the virus. “We’ve really got to get the virus under control because that is driving everything,” he said.