The U.S. government should order a strict nationwide lockdown for a month or longer in order to stem the spread of COVID-19 and spur the flagging economy, a top Federal Reserve official said on Sunday.
“That’s the only way we’re really going to have a real robust economic recovery,” Neel Kashkari, president of the Minneapolis Federal Reserve Bank, said on CBS’s “Face the Nation.” “Otherwise, we’re going to have flare-ups, lockdowns and a very halting recovery with many more job losses and many more bankruptcies for an extended period of time unfortunately,” he said.
While shutting down would adversely affect the economy, Kashkari said after the relatively brief lockdown, things might get better faster.
“I mean if we were to lock down really hard, I know I hate to even suggest it, people will be frustrated by it, but if we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it the way that it’s happening in the Northeast right now,” Kashkari said. “They had a rocky start, but they’re doing a pretty good job right now.”
He also said that without a full lockdown, the virus will continue to spread for the “the next year or two,” which would cause more businesses to shut down.
“We’re going to see many, many more business bankruptcies, small businesses, big businesses, and that’s going to take a lot of time to recover from to rebuild those businesses and then to bring workers back in and re-engage them in the workforce. That’s going to be a much slower recovery for all of us,” Kashkari said.
His remarks came as Dr. Deborah Birx, the Coronavirus Response Coordinator for the White House Coronavirus Task Force, said Sunday that SARS-CoV2, which causes COVID-19, is more widespread than when it first began sweeping across the nation.
“What we are seeing today is different from March and April. It is extraordinarily widespread. It’s into the rural as equal urban areas,” Birx said. “To everybody who lives in a rural area, you are not immune or protected from this virus,” Birx said. “If you’re in multi-generational households, and there’s an outbreak in your rural area or in your city, you need to really consider wearing a mask at home, assuming that you’re positive if you have individuals in your households with comorbidities.”
The financial official also said that federal lawmakers should do more to help businesses, even if it means incurring more debt.
“Right now, the U.S. can fund itself at very, very low rates. Congress should use this opportunity to support the American people and the American economy. I’m not worried about it,” he said. “If we get the economy growing, we will be able to pay off the debt.”
“There’s just so many fewer jobs than there are workers available,” he said. “At some point, it’ll be an issue. When we get the unemployment rate eventually back down to 5 percent, and we want to get it back down to 4 percent or 3 1/2, where it was before, yes, that disincentive to work becomes material. But right now, it’s simply not a factor in the macro-economy that we have in the U.S. because we have so many millions of Americans out of work.”