As the pandemic nears the one-year mark in the US, the long-term economic outlook has improved with the vaccine rollout, said John Williams, president and CEO of the New York Federal Reserve, in a speech Thursday. But while GDP is poised to improve this year, he cautioned that concerns remain.
And speed of the recovery will also depend on the global picture.
“We are seeing a slower rollout of immunizations in parts of Europe and a more subdued rebound in other parts of the world, which will have an effect on the United States,” Williams said. “In addition, the emergence of new strains of the virus could slow the path to a post-Covid world.”
Williams was speaking at One Hundred Black Men of New York, a nonprofit organization aimed at improving the situation for the Black community.
Things are still difficult, he acknowledged. The country is down 10 million jobs from the pre-pandemic level.
In past recessions, the US has seen a decline in manufacturing jobs while service sector establishments such as hotels, bars and restaurants were not as badly affected. In the current recession, it is the opposite case. And in New York City, where much of the economy hinges on the leisure and hospitality industry, employment was down 12% from pre-pandemic levels at the end of 2020. In comparison, employment was 7% below pre-pandemic levels nationally.
In addition, Black and Hispanic workers lost jobs at rates higher than white workers. In addition, Black-owned businesses have been almost twice as likely to close during Covid-19 as white owned firms, he said. A key area of focus for the New York Federal Reserve is better understanding of what contributes to economic inequities and finding solutions.
Long-term, however, the economic picture will improve, though the path of the virus and our collective success in overcoming it will, in a large part, determine the economic future.
Still, Williams said he expects real GDP to rebound sharply this year.
“Indeed, with strong federal fiscal support and continued progress on vaccination, GDP growth this year could be the strongest we’ve seen in decades,” Williams said. “Such a robust rebound would be very welcome after the toughest period for the economy in living memory and a winter where the pandemic has been particularly severe.”
And while long-term things will improve, Williams also said he is optimistic about the medium term.
“I don’t expect our lives to look like they did a year ago — our sense of ‘normal’ may be forever altered — but with vaccinations well underway and a significant decline nationwide in confirmed new cases, I do expect that we can start to look toward a time that will be ‘more like normal.’”