The U.S. economy, battered by a resurgence in the spread of COVID-19, needs increased government spending to tide over households and businesses and broader use of masks to better control the virus, U.S. central bankers said on Monday.
FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo
Without more government aid, Evans said, “aggregate demand trouble is brewing.” Translated for non-economists: people could stop spending and the bottom could really fall out of the economy. “Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate,” he told the Northern Virginia Chamber of Commerce. “Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate.”
“While it may have made it hard for certain individual businesses to hire, it has helped create jobs, because it has helped bolster consumer spending, so the net effect still has probably been positive for the economy for employment.” Bullard, too, emphasized mask-wearing as a significant risk-management tool, especially as he does not expect health officials to be able to reduce disease transmissions to zero because it is so contagious. He also warned against placing too much emphasis on the development of a successful vaccine.
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