San Francisco Federal Reserve Bank President Mary Daly on Wednesday painted a grim picture of the U.S. economic outlook, saying that even under her best-case scenario unemployment will still top 10% at year’s end and won’t return to pre-crisis levels for four or five years.
“If we can get the public health issues under control either through a really robust mitigation strategy or a vaccine, then we can reengage in economic activity really quickly,” Daly told Washington Post Live in a virtual program. “Then it could take just four years or five years; but if we end up with a pervasive long-lasting hit to the economy, then it could take longer.”
The U.S. Labor Department is set to release June’s unemployment rate on Thursday, and economists expect it to have fallen to 12.3% from 13.3% in May as more of the world’s largest economy reopened.
During the Great Recession the nation’s monthly unemployment rate never exceeded 10%, and in February 2020, before widespread shutdowns of economic activity to slow the spread of the virus, it was 3.5%.
A rapid in rise in infections in California, Arizona, Texas and Florida has in recent weeks driven the nation’s tally of new cases to a daily average of 40,000, and the governors in those states have taken some steps to reimpose limits on economic activity to restrain the spread.
Anthony Fauci, the top U.S. infectious disease expert, told lawmakers Tuesday that if current trends continue the country could see 100,000 new cases a day.
Daly said so far it is “too early to tell” whether her best-case scenario will play out, or something worse.
“In the next couple of months we are going to really get a lot more information about what the virus has in store for our economy,” she said.