Powell: “Difficult” months for the vaccine to clear manufacturing and distribution obstacles
© Reuters. FILE PHOTO: Senate Committee on Banking, Housing and Urban Affairs hearing
By Howard Schneider and Ann Saphir
WASHINGTON (Reuters) – A slowing recovery and a mounting pandemic mean the United States is entering a “challenging” couple of months. The potential use of a vaccine has yet to face the hurdles of production and mass distribution before its economic impact becomes clear. Fed Chairman Jerome Powell said Monday.
“The spike in new COVID-19 cases domestically and internationally is worrying and could prove challenging for the next few months,” Powell said in remarks prepared for hearing at a hearing in Congress on Tuesday morning.
“The latest vaccine news is very positive over the medium term. Significant challenges and uncertainties remain including timing, production and distribution, and effectiveness across different groups. It remains difficult to assess the timing and magnitude of the economic impact these developments with a certain amount of confidence. “
Powell’s remarks are his most detailed to date on how the potential arrival of a vaccine may affect the Fed’s outlook, and the development of a rebound, which the Fed chairman has acknowledged, is slowing.
This, in turn, could influence opinions on how much more government support might be needed to help families and businesses bridge the gap between the current recession and the post-pandemic economy.
The vaccinations could start before Christmas, US Secretary of Health Alex Azar said on Monday. [L1N2IG1LN]
In a separate testimony to be given at the same hearing, Treasury Secretary Steven Mnuchin said the economy has made “remarkable strides” in regaining ground lost by the pandemic and that any further government aid should be directed towards “workers and small businesses” be who struggle to continue doing this “as opposed to being widespread in business.
Mnuchin recently urged the Fed to suspend several emergency loan programs and proposed reallocating $ 455 billion to these facilities for such a program.
With the vaccine on the horizon, some analysts expect the economy to take off in the coming months as Americans get vaccinated and widespread immunity to the coronavirus is achieved.
However, Powell said the fate of the economy will continue to depend on the success of this process, and until then the effects of the pandemic will persist – affecting women, minorities and those in the service sector particularly hard.
“A full economic recovery is unlikely until people are confident that it is safe to get back to a wide range of activities,” said Powell.
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