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
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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