Philadelphia Fed president on reopening the economy: “It’s going to take some time”
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Don’t expect an immediate economic rebound, says Patrick Harker, president and CEO of the Federal Reserve Bank of Philadelphia. But he is cautiously optimistic about the country’s resiliency.
“We’re going to hit a bottom, and we’ll probably stay there for a little while. So I’m not in the camp of thinking this is a [V-shaped recovery],” Harker told “Marketplace Morning Report” host David Brancaccio. “On the other hand, I do think if we reopen the economy carefully, and I emphasize carefully — that is by geography, by sector of the economy, where we can assure the safety of the workers and other consumers — I think we can start to climb out of this.”
“There are some areas, some sectors that will take some time,” Harker cautioned. “But I think a combination of being prudent and careful, and having medical technology come to bear to help us get the economy back up and running — I think that is quite possible in the relatively short term. But, again, it will not be flipping a light switch, as people have said. It’s going to take some time.”
A successful recovery will involve supporting individuals whose lives and livelihoods have been particularly affected by the coronavirus pandemic. The Philadelphia Fed released research Wednesday confirming what has been happening on the ground for a while now — that lower wage workers are disproportionately losing income, employment and health insurance during this time.
When it comes to supporting small businesses, Harker said “there’s clearly a need for this in the economy right now,” referencing the $350 billion Paycheck Protection Program, which ran out of money Thursday, just 13 days after it started accepting applications. “I think there’s more that can be done there.”
“We need to keep intact, to the extent we can, the economic infrastructure of this country. And a lot of that economic infrastructure are these small businesses — including the micro businesses,” he said. “We don’t have final answers on that, but it is something on our agenda.”
Harker also pointed to the Fed’s role of providing liquidity as particularly important right now, so that banks are able to make loans in the first place.
“We learned our lesson from the financial crisis — and this is much deeper than the financial crisis in terms of its impact on the American society. We learned to act quickly and to act comprehensively to build programs that create liquidity across the spectrum,” he said.
Click the audio player above to hear the full interview.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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