The coronavirus pandemic could do lasting harm to U.S. productivity unless the nation adapts to the realities of living with COVID-19, says Federal Reserve Bank of Richmond President Thomas Barkin.
“Increased debt loads, reduced bank lending capacity and diminished confidence surely will have a meaningful impact on investment, through which much productivity enhancement occurs,” Barkin said in a blog published Monday on his bank’s website. “A smaller, less-productive workforce leads to a smaller economy and a less attractive future.”
To avoid that trap, Barkin suggested several steps the U.S. could take, including job re-training aimed at low-end service workers displaced by the crisis, as well as productively-enhancing investment in areas such as retail self check-out, telehealth and online education.
“Perhaps new productivity investments will need some government incentive to restore confidence in an uncertain environment,” he said. “It is hard to be optimistic when you are in the depths of a crisis, as we are now. But I’m a big believer in science and its ability to help us meet the challenges ahead.”
Barkin is not a voter this year on the rate-setting Federal Open Market Committee.
