New York Fed President John Williams expected the second half to be a “continued period of economic recovery” in the US. But still, “we’re in a very deep hole” with unemployment over 11%. Right now, it’s a “critical inflection point” where Fed is seeing “mixed signals in different states”.
He also noted two signals that pointed to a “more drawn out period of getting through the pandemic”. Firstly, “businesses are struggling because they don’t have revenue.” Secondly, “state, local governments are struggling because they don’t have tax revenue or other sources of revenue right now”. Federal actions has been “absolutely critically important”.
He added that it’s “not the time to think about liftoff or normalization” of interest rates.
