The U.S. economy needs more help from the fiscal side to recover from the ongoing impact of the coronavirus pandemic, San Francisco Federal Reserve President Mary Daly said Wednesday.
With the White House and congressional leadership still trying to work out details of an aid package, Daly likened the rescue funding so far to a bridge that has helped growth recover somewhat but still needs to be extended.
“We are not out of those woods yet, so we need a longer bridge,” the central bank official said on CNBC’s “Closing Bell.” “Along with what the Federal Reserve has done, we need the fiscal agents to offer support to parts of the economy that have yet to recover, the millions of Americans who are still sidelined and wondering how they are going to pay their bills.”
The comments echo those from other Fed leaders who have noted the limitations on the help they can provide.
Since March, the Fed has slashed short-term benchmark borrowing rates to near zero and implemented more than a dozen lending and liquidity programs. However, Fed officials have stressed that they cannot transfer funds directly into the hands of people and businesses in the way that Congress can.
Daly expressed some optimism about the current state of the economy but noted weakness in the jobs market that the unemployment rate, currently at 8.4%, does not capture.
“We’re in a very big hole, a big ditch if you will,” she said. At the current rate of job growth, she estimated that it will take the economy two or three years to get back to pre-pandemic levels.
Ultimately, Daly said, the path of the virus will determine the pace of economic recovery. According to the experts she has spoken to, a “full-blown mitigation strategy” like a vaccine won’t come into play until mid-2021.
“When I think about the fiscal side of the house right now, I think about providing support for the American people to get up over the coronavirus,” she said.