Philadelphia Federal Reserve President Patrick Harker expressed optimism Thursday that many of the 22 million jobs lost so far during the coronavirus lockdown will come back, though he said the nation shouldn’t rush.
Instead, he counseled a slow return to normalcy, with parts of the economy that can practice social distancing to reopen first and others to come back online as medical advances make it possible.
“We’re going to hit a period where it’s going to be pretty bad. It’s pretty bad right now,” Harkin said during an interview on CNBC’s “Closing Bell.” “We will climb out of this. It’s not going to be a sudden bounce back. I mean, it just doesn’t make sense to me. There’s going to be certain industries like travel and tourism and hospitality and so forth that will take some time to recover.”
One industry he cited specifically was construction. Pennsylvania’s construction employment was at 266,000 in February and had been showing the state’s biggest growth among all occupations prior to the coronavirus.
Since then, the U.S. has had record-breaking numbers of workers head to the unemployment line, with 5.2 million more filing over the past week.
“I’m confident that a lot of the projects that were in train, we’re going to just get back on those and get them done,” he said. “Those jobs will come back.”
Economists have been debating what the recovery will look like, with many suspecting a “U” shape, representing a longer downturn, through the Trump administration has been pushing more of a “V” scenario where growth rebounds quickly.
Harker did not provide a forecast, saying only that he expects the Fed to continue with strong levels of policy support until it’s convinced that the economy is back on solid footing.
Central bank officials have cut their benchmark interest rate to near zero and implemented a series of liquidity and lending programs aimed at supporting the markets and the economy.
“I think in terms of monetary policy we’re going to stay low until we really see the economy starting to recover back to our dual mandate” of full employment and inflation around 2%, he said. “Exactly how long that is, this really is a function of how quickly medical science and industry can put in place the tools, the testing regimes, the vaccines etc. to keep the American public safe. The worst thing we can do in my mind is rush this, and we’re in a situation then where we could have a significant rebound of Covid-19, which would just set us back.”
He said officials should try to restart the economy “as prudentially and as quickly as possible.”
“We will climb out of this. It’s not going to be a sudden bounce back,” the central bank official told CNBC.