Recent high frequency economic data suggest the recovery is slowing as virus infections rise, Atlanta Fed President Raphael Bostic said Tuesday.
Bostic, in webinar remarks to the Tennessee Business Roundtable, said the economy is rebounding from its depths in the first part of the second quarter, but “more recent economic data show the upward trajectory is leveling off a bit, at a level lower than pre-crisis”. That suggests the recovery will take longer, he said.
Bostic said policymakers are examining high frequency data closely as Covid-19 cases rise, and seeing signs that businesses and consumers are “getting nervous again”.
“Business leaders are getting worried. Consumers are getting worried. And there is a real sense this might go on longer,” Bostic said in response to a question.
“We are hearing it more and more as we get more data. People are getting nervous again. Business leaders are getting worried. Consumers are getting worried. And there is a real sense this might go on longer than we have planned for,” Bostic said.
Fed officials are asking business executives to say how many of their workers will return to work and when, Bostic said. Officials are also asking how long businesses can manage without more fiscal support, and how they gauge demand for their goods and services.
Bostic said he is focusing on areas of current and potential weakness in the economy. These include his worry that the Paycheck Protection Program has not reached enough small businesses and small towns. He said he is concerned about the outlook for service businesses, including hospitality and travel that require personal interactions.
The webinar comments about worsening high frequency data echo remarks Bostic made in an interview published Tuesday by the Financial Times that has drawn attention in financial markets.
“There are a couple of things that we are seeing and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise,” Bostic said, according to the FT. “And so we’re watching this very closely, trying to understand exactly what’s happening.”