Fed’s Clarida: Economic Data Since May Are Surprisingly Strong

Fed Vice Chairman Richard Clarida said on Wednesday that the US economy needs another year or maybe more to return to the levels of activity it was at before the outbreak of the pandemic.

Clarida noted that policy moves by the Federal Reserve and Congress have helped spur activity such as home and car purchases and investment in software and equipment, all of which are helping to boost growth.
His comments come ahead of the third-quarter GDP report, which is expected to show annual growth of over 30%.

UBS this week estimated activity at around 80% of what it was a year ago.

“Perhaps another year before the US GDP reaches the pre-pandemic peak, even longer for full employment to return.”

“Economic data since May are surprisingly strong, though outlook remains uncertain, dependent on the virus and successful mitigation efforts.”

“Service sector lags but rebound otherwise is broad across types of consumption goods, housing and investment.”

“New framework elevates the importance of keeping inflation expectations well-anchored at 2%.”