Federal Reserve Chairman Jerome Powell warned Thursday that the U.S. economy will likely need further support from Congress and the central bank even if a coronavirus vaccine becomes available by the end of the year.
Powell said that even if a vaccine is widely available, millions of people who lost their jobs to the pandemic will still struggle to find work as the economy attempts to recover from deeper long-term damage.
“The main takeaway from all of this is that even after the unemployment rate goes down … and there’s a vaccine, there’s going to be a probably a substantial group of workers who are going to need support as they find their way in the post-pandemic economy because it’s going to be different in some fundamental ways,” Powell said during a virtual appearance on a panel hosted by the European Central Bank.
Powell said the economy that emerges from the coronavirus pandemic will likely depend more on technology-centric work, automation and remote jobs that could leave workers let go from retailers, factories, the leisure and hospitality sector and other hard-hit industries with fewer prospects.
He added the dire rise in COVID-19 cases across the country is the “main risk” the Fed sees to the U.S. economy.
“We’ve got new cases at a record level. We’ve seen a number of states begin to reimpose limited activity restrictions, and people may lose confidence that it’s safe to go out,” Powell said. “We’ve said from the beginning that the economy will not fully recover until people are confident that it’s safe to resume activities involving crowds and people.”
The U.S. is currently facing a third wave of COVID-19 in every state, spurring record-breaking daily case increases that have stretched some hospitals beyond their capacity. The U.S. reported 136,000 new cases of COVID-19 on Tuesday, the largest single-day increase on record, according to a tracker by Johns Hopkins University.
Powell, fellow Fed officials and a slew of economists have warned for months that the U.S. will likely need further fiscal support from Congress. Despite the dire increase in COVID-19 cases and cold weather drastically limiting how businesses can adapt to the pandemic, Democrats and Republicans are no closer to striking a bipartisan deal that could be signed into law before the end of the year.
While the U.S. is staring down what could be a grueling and painful winter, recent progress toward distributing a coronavirus vaccine has boosted optimism that the end of the pandemic may soon be within sight.
Pfizer announced Monday that its experimental COVID-19 vaccine was more than 90 percent effective at protecting patients from the novel coronavirus. Anthony Fauci, the nation’s top infectious diseases expert, has also said that he expects to see positive results soon from Moderna’s experimental vaccine candidate.
“Certainly it’s not going to be pandemic for a lot longer because I believe the vaccines are going to turn that around,” Fauci said Thursday at an event hosted by the think tank Chatham House.
Even so, he said he doesn’t believe COVID-19 will be eradicated entirely, but could be controlled to prevent future global outbreaks.
Powell was also cautious about the immediate ability of vaccines to help heal the U.S. economy.
“That is certainly good and welcome news for the medium term but significant challenges and uncertainties remain about timing production, distribution and the efficacy for different groups, and from our standpoint it’s just too soon to assess with any confidence the implications of the news for the path of the economy, especially in the near term,” Powell said.