The ultimate impact of COVID’s delta variant on the U.S. economy remains unknown, Fed Chairman Jerome Powell said Tuesday.
“I would say it’s not yet clear whether the delta strain will have important effects on the economy. We’ll have to see about that,” Powell said, during a question-and-answer session with students and teachers from around the country sponsored by the central bank.
Economists are divided over how or whether some variants of COVID will undermine the strong recovery that has been underway this year. Fed officials have been preparing to remove some of their help for the economy in coming months.
Last Friday, a closely-watched index of consumer sentiment from the University of Michigan plunged to its lowest level in a decade as households reacted “emotionally” to a sense that the variants mean the pandemic might not be over soon.
Some economists note that the delta variant is spreading mainly in southern states that are unlikely to order a shutdown their economies. Last year, the Fed had to provide billions of dollars in assistance as the economy shut down.
The Fed chairman noted that the service sector economy hasn’t healed fully from the depth of the pandemic.
“There’s still millions of people who were, who had those service-sector jobs and are continuing to be out of work, so that’s an important part of the recovery that’s far from complete,” he said.