WASHINGTON: A top Federal Reserve official said on Wednesday that school closures due to the the coronavirus pandemic are stopping the US economy and more support is needed to sustain a recovery.
The United States is seeing the world’s worst coronavirus outbreak and in many parts of the country schools and universities have not reopened or only done so partially, which Fed Vice Chair Randal Quarles told a summit of the Institute for International Bankers posed a risk to the recovery from the severe downturn caused by the pandemic.
“Many parents with children will be forced to work less, or not at all, which is going to be a hardship for them and weigh on the economy,” Quarles said of the school closures.
Echoing comments by the central bank’s Chair Jerome Powell that more spending may be needed to get the world’s largest economy back on its feet, Quarles said, “it will take continued support to sustain a robust recovery.”
Lawmakers in Washington are deadlocked on how much more to spend to stimulate the economy after key provisions of the $2.2 trillion CARES Act passed in March as the pandemic intensified expired.
Among the lapsed provisions was a program of loans and grants for small businesses as well as extra weekly payments for jobless workers after businesses shutdowns to stop the spread of COVID-19 led to tens of millions of layoffs.
Those programs have been credited with helping spur a rebound in some sectors including retail sales and housing, though analysts have raised fears of lasting damage should no new stimulus be passed.
Quarles acknowledges that damage done during the shutdowns in March and April “will take time to reverse” but that the rebound has been stronger “than almost any forecaster expected,” pointing a surge reported by the Census Bureau over the summer of people seeking to start new businesses as evidence of the country’s resilience.