MNI POLICY: Fed's Barkin Sees Challenging Next Few Months

Federal Reserve Bank of Richmond President Tom Barkin said Monday the "next few months can be challenging" for the economic recovery despite promising vaccines against Covid-19.

High savings during the pandemic will be important to back-stop households in the first half of next year with historically low employment, high caseloads and no new fiscal aid package, he said.

Interest-sensitive sectors like housing are booming, but jobs are still down 6.6% compared to pre-Covid levels, meaning 10.1 million fewer jobs in the economy, he said. If labor force participation had not dropped in the pandemic, unemployment would be 9.4%.

Many unemployed service workers are "frozen in place" due to both uncertainty and because they lack the skills for other jobs, while "escalating care responsibilities" are making it difficult for women in particular to work.

"We still have a ways to go," he told a virtual event hosted by Greater Winston-Salem Inc. "I expect a vaccine to be approved by year-end, but a broad enough rollout would not be sometime until this summer at best, so the next few months can be challenging, but with daylight on the horizon."