The U.S. economic recovery from the coronavirus pandemic and subsequent lockdown will take "some time," and may depend on the ability of businesses to provide safe workplaces and consumer environments, according to Chicago Federal Reserve President Charles Evans.
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Evans, while delivering a virtual speech during the Corridor Business Journal mid-year economic review, said that some previously expected trend growth has been permanently lost as a result of the outbreak of the virus.
His forecast assumes that a recent spike in COVID-19 cases, which he said may have been exacerbated by faster-than-expected reopenings, is holding back some economic growth.
On Tuesday, seven states reported new highs for virus hospitalizations: Arizona, Arkansas, California, North Carolina, South Carolina, Tennessee and Texas.
The number of new coronavirus cases across the country per day has hit more than 26,000, up from about 21,000 two weeks ago, according to an Associated Press analysis of data compiled by Johns Hopkins University. The virus has infected more than 2.3 million people in the U.S. and killed 121,279, the most in the world.
Evans said the economy may not return to pre-crisis levels until there is a treatment or vaccine for COVID-19. Until then, he said, the nation's recovery hinges on whether businesses are able to provide safe workplaces for employees and environments where consumers feel comfortable.
He echoed Fed Chairman Jerome Powell that both the U.S. central bank and Congress may need to take additional action to offset the financial and economic pain caused by the virus. Close to 46 million Americans have filed for unemployment benefits since the nation's economy came to a grinding halt, and in the span of two months, the jobless rate skyrocketed from a 50-year low to an 80-year high. The speed and magnitude of job losses are without precedent.
Even after the economic recovery is "well in train," Evans said policymakers will use their tools to meet their mandate for full employment and stable prices, suggesting that interest rates will remain low for years to come.
In its most recent economic projection, the Fed forecast that rates will remain near zero till at least 2022.