Three Federal Reserve policymakers said yesterday that a resurgence in coronavirus cases is slowing the economic recovery and the pandemic will continue to weigh on the U.S. economy and American life for longer than initially expected, Reuters reported. The U.S. economy began to grow in May and June after taking a monumental hit beginning in March. But growth stalled in July as infections spiked in some parts of the country, leading to fresh restrictions, U.S. central bankers said. “The issue with the resurgence in the virus is it slowed down or somewhat muted the recovery we’ve been expecting,” said Robert Kaplan, the Dallas Federal Reserve Bank president. The increase in infections has raised the downside risks to the economic outlook and suggests the reopening of the U.S. economy may be more protracted than many initially anticipated, said Cleveland Fed President Loretta Mester. While U.S. economic growth slowed in July, it could pick up in the third quarter and reach pre-pandemic levels by the end of next year, Federal Reserve Vice Chairman Richard Clarida said. “It will take some time, I believe, before we get back to the level of activity that we were in February before the pandemic hit,” Clarida said. Clarida said his personal forecast for the economy hasn’t changed because of the recent resurgence of the virus in the United States, since the economic momentum from May through early July was stronger than he expected. He also expects support from another fiscal package should even things out.
