The latest wave of COVID-19 outbreaks in the U.S. may weigh on economic growth in the coming months, Federal Reserve Bank of New York President John Williams said.
“That clearly puts a question mark on the ability of the economy to kind of weather this period. I would expect the growth in the fourth quarter and maybe into early next year to slow somewhat,” Williams said Friday during a virtual event hosted by the Financial Times. “I feel relatively positive around how the economy is evolving. That said, there is just a great deal of uncertainty given the rapid rise in cases.”
The New York Fed chief’s comments on the outlook echoed similar remarks from Fed Chair Jerome Powell the day before. Speaking Thursday at a European Central Bank forum, Powell said “the next few months could be challenging” for the U.S. economy as the virus spreads.
The stock market and yields on government debt have risen in recent days, a move Williams attributed to positive news about the development of a Covid-19 vaccine as opposed to increased concerns about inflation.
“Some of the tail risk seems to have gone away in terms of vaccines,” he said. “And so, not surprisingly, that news means that bond yields move up somewhat.”
