Surging US imports will likely lead the world's economic recovery from the coronavirus pandemic, with global growth expected to be more synchronized this year, Federal Reserve Vice Chairman Richard Clarida said on Thursday
WASHINGTON (Pakistan Point News / Sputnik - 25th March, 2021) Surging US imports will likely lead the world's economic recovery from the coronavirus pandemic, with global growth expected to be more synchronized this year, Federal Reserve Vice Chairman Richard Clarida said on Thursday.
The US economy is projected to grow at its fastest pace this year since 1984, with a 6.5 percent expansion in gross domestic product growth versus a 2020 decline of 3.5 percent, Clarida said at an event.
"I would be remiss if I did not highlight that if these projections for US economic activity are realized, rising US imports will serve as an important source of external demand to the rest of the world this year and beyond," he added.
The deputy head of the US central bank also said that despite the challenges of COVID-19, "downside risks to the economy are reduced", at least in the United States, and that he expected a "globally synchronized recovery this year."
Clarida disputed the notion that inflation pressures will overwhelm the economy.
"I disagree that fiscal support this year poses a long-term upward risk to inflation. There is slack in the economy, and over time (the) impact of the package will diminish," he said.
He said there will likely be inflation this year after the 2020 collapse in price pressures forced by the pandemic, citing "pent-up demand".� But he stressed that the Fed will act to keep inflation expectations anchored at its long-running target of 2% while "broad financial conditions remain very accommodative".
Clarida, however, said full economic recovery will be signaled by progress on the jobs front.
The Labor Department reported on Thursday that some 684,000 Americans filed for jobless claims last week, the lowest number since the COVID-19 breakout a year ago, suggesting the jobs market may finally be turning the corner with the pandemic.
The United States lost more than 21 million jobs between March and April, at the height of business lockdowns forced by the coronavirus. About 10 million of those jobs may have not returned, data shows.
Federal Chairman Jerome Powell said earlier this month the central bank will likely keep rates at near-zero for the next two years until the annual employment rate fell to 4.0 percent or lower, denoting "maximum employment".
Clarida acknowledged that the labor market was "still in a deep hole" and that it was important to focus on getting to maximum employment.