Cyber-wellness Means Cyber-awareRead more Addressing maternal mental healthcare in AfricaRead more Qatar v. Ecuador to kick off FIFA World Cup 2022™ on 20 NovemberRead more Webb Fontaine Announces Launch of Niger National Single Window (NNSW) to Bolster TradeRead more Ethiopia: Loan from United Nations Fund Allows Food and Agriculture Organization (FAO) to Scale Up Fertilizers for Farmers in TigrayRead more How Choosing the Right Printer Helps Small Businesses and Content Creators to Save Time, Maximise Productivity and Achieve GrowthRead more Eritrea: World Breastfeeding WeekRead more Eritrean community festival in Scandinavian countriesRead more IOM: Uptick in Migrants Heading Home as World Rebounds from COVID-19Read more Network International & Infobip to offer WhatsApp for Business Banking Services to Financial Institution Clients across AfricaRead more

US recovery could be ‘unprecedented,’ Fed official says

show caption
The Federal Reserve's plan to keep interest rates low for a long period of time to spur maximum employment has sparked fears of a rise in inflation./AFP
Print Friendly and PDF

May 18, 2021 - 06:09 AM

WASHINGTON — Bringing the US economy back from the brutal downturn caused by Covid-19 will take time, and hiccups like last month’s weak hiring data will happen, a top Federal Reserve official said Monday.

The comments from Fed Vice Chair Richard Clarida come after government data showed the US economy added only 266,000 jobs in April, far fewer than expected and complicating expectations for a strong bounceback in employment and growth this year.

“We’re still more than eight million jobs short of where we were 14 months ago, so there’s still a deep hole in the in the labor market. But I also believe that it may take more time to reopen a $20 trillion economy than it did to shut it down,” Clarida said in a conversation with Atlanta Federal Reserve President Raphael Bostic.

“This was an unprecedented shock, it led to an unprecedented collapse, and we may have an unprecedented recovery,” Clarida said.

The world’s most severe Covid-19 outbreak hammered the US economy in 2020, causing tens of millions of layoffs and a severe 3.5 percent contraction in growth.

The United States is expected to bounce back strongly this year as Covid-19 vaccines quell the pandemic in its borders, and Clarida said growth could be as high as seven percent.

But the economy’s reopening following business restrictions imposed to stop the virus, combined with the Fed’s recent decision to allow interest rates to remain low for a long period of time to generate maximum employment, has raised fears of a spike in inflation.

There are signs those increases are already here, with the Labor Department’s consumer price index in April jumping 4.2 percent compared to the same month in 2020, its biggest yearly increase since 2008.

Clarida said the central bank is ready to act to quell inflation, but the price increases are likely to be temporary and shouldn’t get in the way of the Fed’s goal of spurring hiring among communities with high joblessness, like racial minorities and workers with less education.

“Our baseline view is that achieving maximum employment will not put unwanted or unwelcome upward pressure on the price level,” he said.

  • bio
  • twitter
  • facebook
  • latest posts

LMBCBUSINESS.COM uses both Facebook and Disqus comment systems to make it easier for you to contribute. We encourage all readers to share their views on our articles and blog posts. All comments should be relevant to the topic. By posting, you agree to our Privacy Policy. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, name-calling, foul language or other inappropriate behavior. Please keep your comments relevant and respectful. By leaving the ‘Post to Facebook’ box selected – when using Facebook comment system – your comment will be published to your Facebook profile in addition to the space below. If you encounter a comment that is abusive, click the “X” in the upper right corner of the Facebook comment box to report spam or abuse. You can also email us.