FED VICE CHAIR, CLARIDA SAYS ECONOMY NEEDS ‘PERHAPS ANOTHER YEAR’
TO RETURN TO PRE-PANDEMIC LEVEL
T
he impacts of the COVID-19 pandemic have torn down most of the economic sectors in the U.S., which nearly led a recession. Most of the businesses were significantly affected, leading to laying off of millions of Americans. The pandemic, which many thought would be a minor disruption of normalcy, persisted through from the beginning of the year and is predicted to go on into 2021. When the adverse impacts of the pandemic were at the peak, the government took a bold step by slowly reopening the economy in between May and June.
“That said, the Covid-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak,” Clarida told the Institute of International Finance. “It will likely take even longer than that for the unemployment rate to return to a level consistent with our maximumemployment mandate.”
Since the reopening, the economy has been recovering at a slower than predicted. And from the look of things, the economy will take longer than expected to recover by half at least, leave alone going back to the pre-pandemic level.
Since the reopening of the economy, 11.4 million jobs have been brought back. Despite this, the U.S. unemployment rate has remained at 7.9% in September. “The global economy is going to look a lot like the U.S. It’s going to take some time to recover from this shock,” Clarida said. “So far so good in terms of the recovery, but a ways to go not only in the U.S. but globally.”
A recent development from the Fed has revealed that the U.S. economy will need another year, or maybe more to get back to the level of activity equal to the pre-pandemic period, according to the Fed Vice Chairman Richard Clarida.
Clarida cited that the Fed sees activity continuing to improve gradually after a sharp third-quarter recovery, and cautioned that the outlook ahead is highly uncertain and subject to the developments from the pandemic.
Clarida further noted that policy moves by the Federal Reserve and Congress had offered significant aid in stimulating economic activities such as buying properties, cars, and investing in software and equipment.
Work cited. https://www.cnbc.com/2020/10/14/clarida-says-us-economyneeds-perhaps-another-year-to-return-to-pre-pandemic-level. html.
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THE POWER IS NOW MAGAZINE | OCTOBER 2020
