MNI POLICY: Fed's Williams: Recovery Slowing Amid Virus Surge

By Jean Yung

     WASHINGTON (MNI) - Despite indications of an economic rebound from the

depths of Covid-19 shutdowns, the recovery is slowing in states battling a new

surge in cases, Federal Reserve Bank of New York President John Williams said

Tuesday. 

     "This is a valuable reminder that the economy's fate is inextricably linked

to the path of the virus. A strong economic recovery depends on effective and

sustained containment of COVID-19," Williams said. 

     The Fed is "committed to using our full range of tools to support the

economy and bring about a full and robust recovery," he said, and "it's going to

take considerable time to restore the economy to its full potential." 

     Near-zero rates, QE and emergency credit programs have stabilized the

financial system and helped position the economy for a strong rebound, he said.

Fiscal policy has provided support to families, small businesses and the

unemployed and contributed "greatly" to the rebound in consumer spending and

jobs.

     --VIRUS DAMAGE UNDERSTATED

     Official reports from the Labor Department saw the unemployment rate hit

nearly 15% in April as 20 million Americans lost their jobs, but "these figures

understate the full extent of the pandemic's toll on the economy," Williams

said. 

     The Fed is also turning to high-frequency data to get a more timely read on

the economy, Williams said in remarks prepared for an Institute of International

Finance virtual conference. That data indicates "we've likely seen the low point

of the downturn," he said.

     "Although this improvement is welcome, the economy is still far from

healthy and a full recovery will likely take years to achieve."

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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