July 7, 2020 / 2:22 PM / a month ago

Fed's Bostic: Business 'getting nervous again' as virus surges

FILE PHOTO: Raphael Bostic, President of the Federal Reserve Bank of Atlanta walks into the three-day "Challenges for Monetary Policy" conference in Jackson Hole, Wyoming, U.S., August 23, 2019. REUTERS/Jonathan Crosby

(Reuters) - The surge in U.S. coronavirus cases has made business owners “nervous again,” Atlanta Federal Reserve Bank President Raphael Bostic said on Tuesday, and prompted him to focus on company decisions over the next three to six weeks.

“We are hearing it more and more as we get more data. People are getting nervous again. Business leaders are getting worried. Consumers are getting worried. And there is a real sense this might go on longer than we have planned for,” Bostic said in webcast remarks to the Tennessee Business Roundtable.

A Fed survey released on Tuesday morning showed Americans may be hunkering down for a longer than expected fight against the virus and the economic fallout from it.

The poll of 1,869 people took place between June 3 and June 12, as the first signs emerged of a newly growing coronavirus caseload, showed 46% of respondents now think it will take more than a year for conditions to return to normal. That is up from 35% in an April survey.

In conversations with managers in his Southern district, where several states are facing a renewed health crisis, Bostic said he is asking “what are their plans for the next three weeks, six weeks, how are they thinking about staffing decisions.”

That period could prove critical in the pace of an economic recovery Bostic suggested may plateau sooner and at a lower pace than expected.

At the end of July, some of the programs approved to support businesses and families during the pandemic will expire, most notably the $600-a-week addition to unemployment benefits.

With the caseload growing again, Bostic said it may become apparent that a longer bridge to the post-pandemic world is needed.

“It is pretty clear this is going to go on beyond the expiration of relief efforts,” Bostic said, adding that as the fact becomes clear, elected officials might “strongly consider doing more.”

Reporting by Howard Schneider; Editing by Chizu Nomiyama and Jonathan Oatis

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