Two senior Federal Reserve officials lamented the U.S. failure to control the coronavirus pandemic, which stood in poor comparison with efforts in other advanced countries and was undermining the nation’s economic recovery.
Drawing a strikingly unflattering contrast with the experience of Europe, Federal Reserve Bank of Boston President Eric Rosengren said U.S. overeagerness to reopen commercial activity without sufficiently containing the spread of Covid-19 had backfired.
“Limited or inconsistent efforts by states to control the virus based on public-health guidance are not only placing citizens at unnecessary risk of severe illness and possible death, but are also likely to prolong the economic downturn,” Rosengren told the South Shore Chamber of Commerce in Massachusetts on Wednesday.
Rosengren said resurgences of the virus have led to a slowdown measured by high-frequency economic data. That slowdown, he said, is likely to continue, causing him to worry that an increasing number of temporary layoffs may turn into permanent job losses despite significant fiscal and monetary policy intervention.
“Even as official restrictions relax, many people may prefer to continue avoiding activities that require social interaction in order to protect their own health,” he said. “With such a pattern of behavior taking hold, momentum in the economy toward returning quickly to full employment would likely fade.”
Death Toll
Deaths caused by Covid-19 in the U.S. topped 164,000 as of Aug. 12, with confirmed cases rising 4.1% in the past week, according data collected by Johns Hopkins University and Bloomberg News. The U.S. labor market continued to improve in July as employers added 1.76 million jobs, but Rosengren pointed to fresh data on consumer activity showing retail spending was falling again in areas where the virus was spreading most rapidly.
The Boston Fed chief compared the U.S.’s poor performance in containing the virus to Europe, where many countries cracked down harder on mobility and public activity, causing a sharp economic downturn but leading to a quicker, stronger recovery.