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COVID-19 resurgence in fall could prompt double-dip recession: Fed official

(Xinhua)    09:40, August 27, 2020

WASHINGTON, Aug. 26 (Xinhua) -- A resurgence of COVID-19 infections in the fall could drag the U.S. economy into a double-dip recession, a senior U.S. Federal Reserve official said on Wednesday.

"An important risk to that outlook is thinking about what happens as we come into the fall, whether we see any resurgence in the virus that would cause an additional pullback in the economy," Esther George, president of the Federal Reserve Bank of Kansas City, said in an interview with CNBC aired Wednesday.

"We'll monitor that carefully to see whether that plays out," she said.

George said she expected the U.S. economy to return to growth in the third and fourth quarters following a sharp contraction in the second quarter, but the recovery path forward will be determined by the pandemic.

"I think it's too soon to try to speculate on whatever else might be needed, other than to say the Federal Reserve is going to be very vigilant on that and be prepared to respond if they would have to," she said.

George's remarks came after former Federal Reserve Chair Janet Yellen and Jared Bernstein, a top economic adviser to former Vice President Joe Biden, warned on Tuesday that the U.S. economy could degrade to "no growth at all" if Congress fails to pass the next COVID-19 relief bill.

While the extra federal unemployment benefits for roughly 30 million Americans expired at the end of July, congressional lawmakers and the Trump administration remain deadlocked over the next COVID-19 relief package.

As negotiations stall, President Donald Trump signed a series of executive orders to extend certain COVID-19 economic relief, but analysts believe that they are unlikely to provide a meaningful boost to the overall economy.

"The longer it takes to convince lawmakers that the economy is not experiencing a V-shape recovery and that without their support a W-shape is likely, the more likely it will suffer a W," said Mark Zandi, chief economist of Moody's Analytics, referring to a double-dip recession.

While the U.S. economy has bounced back noticeably in recent months, it is "still far from back to normal," Fed Board Governor Michelle Bowman said Wednesday at a conference.

"The future course and timing of the recovery is still highly uncertain, and its pace and intensity are likely to vary across areas of the country -- heavily influenced by the decisions of state and local governments," Bowman said, adding progress toward a full recovery in economic activity may well be "slow and uneven."

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Wen Ying, Liang Jun)

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