Top Fed official suggests US economic recovery may be losing steam
Fed's Rosengren warns US economic rebound could be stalling amid COVID-19 spike
The U.S. economic recovery from the coronavirus pandemic may be stalling after a surge in infections across the country forced most states to pause or reverse their reopenings, according to Boston Federal Reserve President Eric Rosengren.
“Despite the sizeable interventions by monetary and fiscal policymakers, high-frequency economic data indicate that the recovery may be losing steam, as activities in many states are once again restricted, officially or voluntarily, to slow the virus’s spread," Rosengren said Wednesday while speaking to the South Shore Chamber of Commerce.
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Rosengren raised fresh doubts about the viability of a full economic rebound and said the virus will continue to dictate the speed of the nation's turnaround -- a sentiment that has been echoed by Jerome Powell, the chairman of the U.S. central bank.
"Unfortunately, as long as the virus poses significant threats to public health, a full economic recovery will be very difficult as individuals, often voluntarily, avoid activities that place their health at risk," Rosengren said.
The U.S. job market recovery appears to be plateauing, with the Labor Department's July jobs report showing a gain of 1.8 million new positions, well below the record-shattering 4.8 million created in June.
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Over the past three months, the economy has added back less than half -- about 42 percent -- of the 22 million jobs it lost during the pandemic, data shows. There are still 10.6 million more out-of-work Americans than in February.
As the pandemic limits the ability of the economy to recover quickly, it's possible that a growing number of job losses could become permanent, according to Rosengren.
"An increasing number of those who are currently temporarily unemployed may ultimately have to face permanent layoffs and the difficult task of finding a new job in a changed economic environment," he said.
FOX Business' Edward Lawrence contributed to this report