'People are getting nervous again': Fed president says virus resurgence could prematurely freeze economic recovery

• The coronavirus' rapid spread throughout several states could dramatically slow the US economic rebound, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said in a Tuesday web conference.
• The increase in infections is already driving fears that the US recession could last longer than first anticipated, he said.
• "People are getting nervous again. Business leaders are getting worried. Consumers are getting worried," Bostic added.
• The central bank president highlighted consumer confidence as "critical" to whether a recovery continues or freezes up.

The coronavirus' accelerated spread throughout the US threatens to halt the nation's economic recovery before it takes off, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said Tuesday.

Several states reported record increases in COVID-19 cases over the weekend, reviving fears that a second wave of infections could push the US back into strict lockdowns. The uptick is already hitting business sentiments, and the nation is starting to grapple with the prospects of a lengthy recession, Bostic said.

"People are getting nervous again. Business leaders are getting worried. Consumers are getting worried," he said during a web conference with the Tennessee Business Roundtable. "There is a real sense that this might go on longer than we had hoped and we had expected and we had planned for."

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Economic data detailing the pandemic's toll has yet to reveal such a slowdown. June's jobs report showed the unemployment rate falling for a second straight month to 11.1% and American businesses adding 4.8 million payrolls last month. Yet the lasting damage isn't yet visible. Bostic recently told the Financial Times his "biggest concern in this whole period" is the extent of permanent job loss throughout the US.

The central bank president also pointed to consumer confidence as an indicator to watch for whether a recovery continues or freezes up. Retail spending data has picked up from its March lows, but experts caution that a full rebound in sentiments may not take place until a coronavirus vaccine reaches the market.

"That worry, that lack of confidence, is a critical thing that we all need to be mindful of, that I definitely need to be mindful of, as so much of the US economy is based on confidence," he said.

Bostic reiterated that the Fed has no plans to close any of its nine emergency relief programs anytime soon. He also noted that, as cases are rising slower in some areas, studying those regions' containment methods may be the best way to aid the economy.

"We might need to do better and do more in terms of following and respecting our social distance requests and do things like wear masks," he added.

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