The uptick in U.S. coronavirus cases could dampen the recovery of the nation’s economy, according to a Federal Reserve official.
Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, whose reach extends into the south caught up in the resurgence of COVID-19 cases, said business reopening has leveled off.
“There are a couple of things that we are seeing and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise,” Bostic told the Financial Times. “And so we’re watching this very closely, trying to understand exactly what’s happening.”
Bostic’s comments come as some states have eased lockdown restrictions and coronavirus case numbers have increased. Hospitals across the Sun Belt continue to be filled with new coronavirus patients, The Washington Post reported.
The number of intensive care unit beds in Arizona reached 89 percent capacity on Monday. Other states including Alabama, California, Georgia, North Carolina, South Carolina and Texas also reported record numbers of hospitalizations, the newspaper reported. Since June 9, the seven-day average of new cases has topped all previous records.
Last week, the nation’s economy added a record 4.8 million nonfarm jobs in June and the unemployment rate fell to 11 percent, the U.S. Labor Department reported.
But on Monday (July 6), Victoria Fernandez, chief market strategist at Texas-based Crossmark Global Investments, said those numbers failed to capture the fallout from surging coronavirus cases. Florida, Texas, Arizona and California, have been forced to reintroduce restrictions.
Economists at Jefferies Group LLC, the New York-based global financial services company, wrote “the loss of momentum is broad-based, spanning small business activity, discretionary footfall, restaurant bookings, traffic congestion and web traffic to state unemployment portals,” the Times reported.
Bostic said the Atlanta Fed was trying to determine whether this leveling off is a sustained pattern, or just a pause.
“To what extent are business losses permanent, are job losses permanent?” he asked, according to the newspaper.
One solution, he said, was for Congress to provide more financial support for the U.S. economy as most of the $3 trillion in aid to families and businesses is set to expire, the Times reported.
“When the relief was passed initially, there was a thought about how long this was going to last, and as more information has come in, there’s reason to suggest this is going to last longer than that,” he said. “The longer this goes without them getting relief, the more likely that they’re not going to be able to survive. And so all the jobs associated with that will move from the temporary column into permanent column and that will be extremely painful.”