COVID-19

Philadelphia Fed president on reopening the economy: “It’s going to take some time”

David Brancaccio and Rose Conlon Apr 17, 2020
HTML EMBED:
COPY
A couple wearing masks crosses the almost deserted Times Square on April 13, 2020 in New York City. Johannes Eisele/AFP/Getty Images
COVID-19

Philadelphia Fed president on reopening the economy: “It’s going to take some time”

David Brancaccio and Rose Conlon Apr 17, 2020
A couple wearing masks crosses the almost deserted Times Square on April 13, 2020 in New York City. Johannes Eisele/AFP/Getty Images
HTML EMBED:
COPY

President Donald Trump’s guidelines for reopening the country give states broad leeway in deciding when and how their businesses and public spaces can begin the process.

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.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.