Cleveland Federal Reserve Bank President Loretta Mester to speak at a Liberal Arts Macroeconomics Conference webinar on the economic outlook, with audience Q&A.
High-frequency economic data suggest the economy slowed again in June in response to an uptick in the number of virus cases, Cleveland Fed President Loretta Mester said Wednesday.
"In late June, virus cases in many parts of the country began rising again and, in response, some states have hit the pause button on their reopening plans, while other states have reimposed some restrictions on activities," Mester said during an online event hosted by the Liberal Arts Macroeconomic Conference.
"Although we don't yet see the effects of the pause in many of the official economic statistics, the higher-frequency data and discussions with regional contacts do indicate that economic activity has slowed in recent weeks. Thus, the reopening phase may be more protracted than many had anticipated when it started."
Mester said the outlook for the economy hinges on the path of the virus, and that mitigation efforts, medicine, and vaccines are key, and mask-wearing, and social distancing are critical.
The Fed's policy steps and fiscal policy measures have provided key support, and "it is also clear that more fiscal support is needed to provide a bridge for households, small businesses, and state and local municipalities that have borne the brunt of the economic shutdown until the recovery is sustainably in place," she said.
Mester said her forecast still calls for GDP to be about 6% below its level at the end of 2019, "that the unemployment rate will remain elevated, at around 9 percent or so; and that inflation will be well below our 2 percent goal. "
"Of course, the uncertainty around this forecast is extremely high: we are in an unprecedented situation and outcomes depend not only on appropriate economic policy but also on public health considerations," she said.
"The increase in virus cases that we've seen in recent weeks has raised the downside risks to the outlook and is a stark reminder that there are several different scenarios that could play out."
Mester said the Fed remains committed to using its full range of policy tools to provide relief to households and businesses, and to support the economic recovery and return to price stability.--By Mace News