Fed’s Daly sees gradual growth, with COVID surge a risk

FILE PHOTO: Mary Daly, President of the Federal Reserve Bank of San Francisco, poses after giving a speech on the U.S. economic outlook, in Idaho Falls
FILE PHOTO: Mary Daly, President of the Federal Reserve Bank of San Francisco, poses after giving a speech on the U.S. economic outlook, in Idaho Falls, Idaho, U.S., November 12 2018. REUTERS/Ann Saphir/File Photo

November 10, 2020

By Ann Saphir

(Reuters) – The U.S. economy could slow as people respond to the ongoing surge in coronavirus cases by playing it safer, San Francisco Federal Reserve Bank President Mary Daly said on Tuesday, adding that more support for hard-hit sectors and individuals is still be needed.

“My modal outlook is that we will continue to expand at a gradual pace,” Daly told Reuters in an interview. While news of a vaccine is “heartening,” she said, the current increase in cases “does give me cause for concern.”

Continued debate over the outcome of the presidential election also adds to the “cloud of uncertainty” over the economy, she said.

While certain sectors of the economy have come back and no longer need extra help, others – including restaurants, tourism and travel – are still hurting and need additional support, she said, including more aid to the unemployed and for small businesses.

Fed policy, meanwhile, is helping bridge people through the pandemic and, once the virus is less of a threat, will stimulate faster growth, she said.

“When the virus is behind us, I feel we have the economy in a good position to go,” she said, but only as long as policies are in place to help those hurt most in the pandemic and the recession.

Daly’s sober assessment of the future of economic growth comes as data from a late-stage COVID-19 vaccine trial by Pfizer Inc <PFE.N> spurred market bets of a swift economic recovery next year.

“The economy right now is being dictated by coronavirus’ existence, and I think less by the potential for a vaccine,” she said.

(Reporting by Ann Saphir; Editing by Nick Zieminski)