(Reuters) – The U.S. economy is rebounding strongly after taking a big hit because of the coronavirus pandemic, but it may be another year before the economy returns to pre-crisis levels and take even longer for the labor market to recoup lost ground, Federal Reserve Vice Chair Richard Clarida said on Monday.
The pandemic threw the U.S. economy into a “very deep hole,” Clarida said. While economic activity likely bounced back strongly in the third quarter, the outlook is “unusually uncertain,” he said.
“While recovery since the spring collapse in economic activity has been robust, let us not forget that the full economic recovery from the COVID-19 recession has a long way to go,” Clarida said in prepared remarks for a virtual event organized for the American Bankers Association Convention.
The U.S. unemployment rate has dropped significantly to 7.9% from a high of 14.7% seen earlier this spring, but it may not drop below 4% again until the end of 2023 according to Fed projections.
Clarida said more monetary and fiscal policy are needed to support the economy throughout the recovery, and he said the Fed will continue to do its part. “Speaking for the Fed, I can assure you that we are committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust and rapid as possible,” Clarida said.
(Reporting by Jonnelle Marte; Editing by Chizu Nomiyama)
