Por Howard Schneider
Jul 8 (Reuters) – Federal Reserve officials raised new questions on Wednesday about the durability of the United States’ recovery, while new polls highlighted the unfolding risks posed by the relentless coronavirus pandemic.
In separate appearances, Atlanta Fed Presidents Raphael Bostic; Boston’s Eric Rosengren and Richmond’s Thomas Barkin pointed to what Barkin characterized as “bumps” facing the economy: firms depleting existing order books without replenishing them, and households facing the end of unemployment benefits and other supports.
“Businesses like construction had very good portfolios and continued to function” in the first phase of the pandemic, Barkin said in webcast remarks to a group of local chambers of commerce in the Shenandoah Valley, Virginia.
But “new orders are not online the same way. We have tax payments … they are coming to an end and it is not clear what will replace them.” The reinforced unemployment benefits, which have proven to be key to replacing income to spend amid record unemployment, expire this month.
Facing that “fiscal cliff,” the economy is also grappling with rising COVID-19 cases to record levels.
Not all Fed officials had such a bleak vision. St. Louis Fed Chief James Bullard said on CNBC that he felt the face masks will become “ubiquitous” to dominate the pandemic, and that many lost jobs will be made up by the end of the year. But Bullard may be the most outlier among his colleagues at the central bank.
“Unfortunately, I expect the economy to remain weaker than many expected during the summer and fall,” Rosengren said in an interview with Reuters.
Bostic, meanwhile, told the Rotary Club of Columbus, Georgia, that he was concerned not so much that states in his southern region had attempted to reopen too quickly, but without due attention to how to manage the riskier activities.
Cases are now increasing in places like Florida, and data on small businesses, for example, “is suggesting that the energy of reopening business and general activity is beginning to stabilize,” Bostic said.
Comments from the Fed authorities, suggesting that the seemingly rapid rebound in jobs, retail sales and some other activity measures in May and June may not persist, were reinforced in two business surveys released on Wednesday.
In the latest quarterly survey of more than 500 companies, conducted jointly by the Atlanta-Richmond Fed and Duke University, chief financial officers on average said they were concerned about continued weak demand for their products and expected the recovery in the Employment will stagnate for the rest of the year.
Meanwhile, a quarterly confidence index released by the Conference of State Bank Supervisors showed that community bankers remained deeply pessimistic. The most recent reading was 90, almost unchanged from the last survey and well below the “neutral” reading of 100. The figure was 122 last fall.
(Report by Howard Schneider, Edited in Spanish by Manuel Farías)