US economic data is likely to become grimmer as the effects of the coronavirus pandemic become clearer, and it is difficult to know what the recovery could look like, New York Federal Reserve Bank President John Williams said on Thursday.
The most recent economic figures do not fully capture the pain American families are going through, since some people who stopped working for health reasons or to care for a family member may not be counted, Williams said in remarks during a webinar organized by business groups based in upstate New York.
The unemployment rate, which surged to 14.7 percent in April, “is sure to get worse before it gets better,” Williams said.
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As businesses reopen, there will be more information on the economic toll on various industries and how long it could take the economy to rebound, he said.
“What we don't know is what the shape or timescale of the recovery will be,” he said. “It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services.”
Pedestrians wear protective masks during the coronavirus pandemic as they walk past Brookfield Place Saturday, May 9, 2020, in New York. (AP)
The Fed acted quickly to shore up the US economy in March as the coronavirus spread. Policymakers cut rates to near zero and rolled out emergency lending facilities intended to keep credit flowing to businesses and households. It also launched open-ended asset purchases, including Treasury securities and mortgage-backed securities, to improve market functioning.
Williams said he was not worried the Fed’s actions would lead to inflation, and he said rates will stay low until policymakers are “confident” that the economy is stable and on track to reach the Fed's maximum employment and price stability goals.
He also said negative interest rates would have adverse consequences and does not consider them as something the central bank should be using now.
“We've looked at this very carefully at the Federal Reserve,” he said. “The view is that negative interest rates are not the right tool to be used right now.”