Fed’s Rosengren: Even With Positive Job Numbers, US In ‘Significant Recession’

Despite a better than expected job report, Boston Federal Reserve President Eric Rosengren told CNBC a full recovery is impossible until COVID-19 is under control.

“We have a long way to go before we are fully recovered,” he said on “The Exchange,” adding, “But I will say this employment report was a very positive one.”

The country added nearly 1.4 million jobs in August while the nation’s unemployment rate fell to 8.4 percent, down from 10.2 percent in July, the U.S. Bureau of Labor Statistics reported Friday (Sept. 4).

“At 8.4 percent unemployment, that is a very significant recession and I do think that it’s going to take quite a while to bring all those people back, particularly if it takes us a long time not only to get the pandemic resolved but also to get a workable and safe vaccine that is widely distributed,” Rosengren said. “I think it really is going to take that before we see a completely normalized market.”

The Hub Fed chief acknowledged the latest job numbers are a “significant improvement.” But he added the economy still faces serious challenges.

While the economy added 249,000 retail jobs, and leisure and hospitality jobs grew by 174,000, two of the nation’s hardest hits sectors, Rosengren said those sectors have a long way to go before they return to pre-pandemic levels.

For its part, the Fed has tried to help the recovery by keeping short-term interest rates at near zero and offered a series of lending and liquidity programs.

“We already are doing quite a lot in terms of stimulating the economy,” he told the network. “I think we’ll have to consider what’s appropriate forward guidance. But I think at this point the market understands that we’re not planning on raising rates anytime soon.”

On Thursday (Sept. 3), the U.S. Department of Labor reported the number of Americans who filed for jobless claims fell to its lowest number since the pandemic began in March, better than analysts’ expectations.

For the week ending Aug. 29, the advance figure for seasonally adjusted initial claims was 881,000, a decrease of 130,000 from the previous week’s revised level.

The total number of people claiming benefits for the week ending Aug. 15, the most recent data available, was 29.2 million, up 2.2 million from the previous week.