Fed’s Daly Says More Fiscal Aid Needed for Equitable Recovery

(Bloomberg) -- The U.S. economy needs further fiscal investment to recover from the coronavirus pandemic in an equitable and lasting way, San Francisco Federal Reserve President Mary Daly said.

“We also need fiscal policy makers to commit to sustained investments in our economic future,” Daly said in prepared remarks for a National Press Club virtual event on Monday. “The need for this was evident before the crisis, and it’s even more evident now.”

Fed officials held interest rates near zero at a two-day meeting last week and signaled they’d probably stay there through 2022.

Daly, who is not a voter this year on the rate-setting Federal Open Market Committee, said that she expects the “current stance of highly accommodative monetary policy to continue until the economy has largely recovered what’s been lost due to the virus.”

New Deal

She cited New Deal worker programs following the Great Depression, education via the GI Bill following World War II and the Highway Act, which put Americans to work building the interstate highway system in the 1950s.

Fiscal investment should focus on health infrastructure in the current crisis, early childhood education, more-accessible higher education and digital infrastructure that will bring Internet connections to more Americans.

“Right now, not everyone gets the same chance to succeed in our country. And it’s not for lack of trying -- it’s for lack of opportunity,” Daly said. “Our system, whether we meant it to be or not, is set up that way. But we don’t have to accept this.”

The coronavirus-induced crisis has had an unequal impact on Americans. Minorities and women have been disproportionately affected by job losses and, in some cases, virus deaths. While the unemployment rate fell in May for the country overall and White Americans, it rose for Black Americans. The death rate for Black people from Covid-19 is more than double that of White people.

Daly added that the current low interest-rate environment makes financing this type of spending relatively cheap.

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