- Federal Reserve Chair Jerome Powell said Tuesday that although recent vaccine updates are “certainly good news,” the US economy faces a tough path to full recovery.
- Moderna and Pfizer and BioNTech recently announced their experimental vaccines were highly efficient at protecting trial patients from COVID-19. The news drove stocks to record highs as investors boosted bets on a swift rebound.
- Still, “it’s too soon to say with any confidence what the impact on the path of the economy will be from the vaccines,” Powell said at a virtual conference.
- “We’ve got a long way to go,” he added, as widespread vaccination “is months into the future” in a best-case scenario.
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Recent progress on developing coronavirus vaccines is “certainly good news,” but the US economy is still far from returning to pre-pandemic levels of activity, Federal Reserve Chair Jerome Powell said Tuesday.
Investors positioned for a sooner-than-expected economic recovery over the past week as data from Moderna and Pfizer and BioNTech’s experimental vaccines showed strong efficiency in preventing COVID-19. The Dow Jones industrial average and S&P 500 closed at record highs on Monday, and investor capital continues to shift into cyclical sectors pegged to the economy.
Yet soaring COVID-19 case counts could derail the nation’s bounce-back before a vaccine reaches the public. Widespread vaccination “is months into the future” even in a base-case scenario, Powell said, and “significant challenges and uncertainties” face the economy today.
“It’s too soon to say with any confidence what the impact on the path of the economy will be from the vaccines,” Powell said at a virtual conference. “We’ve got a long way to go.”
Some indicators are already pointing to a slowing pace of recovery. US retail sales grew just 0.3% in October after bouncing 1.6% the month prior, according to Census Bureau data published Tuesday morning. Economists surveyed by Bloomberg expected 0.5% growth last month. Though the reading marks a sixth-straight month of growth, it also shows a sharp deceleration ahead of the critical holiday season.
Fed officials will next meet on December 15 and 16 to gauge whether the central bank should further prop up the virus-slammed economy. Policymakers have repeatedly emphasised the importance of fiscal stimulus for fuelling the recovery, but Congress remains far from passing a new spending bill.
Mitch McConnell lambasted House Democrats’ $US2.2 trillion proposal as “unserious” on Tuesday, and has previously pushed for a $US500 billion package. Democrats haven’t budged, and President-elect Joe Biden urged Congress to pass a $US3.4 trillion plan on Monday.
“It’s likely the economy will continue to need support from both monetary policy and fiscal policy,” Powell said.
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