By Jonnelle Marte
NEW YORK (Reuters) - A resurgence in coronavirus cases is slowing the economic recovery and the pandemic will continue to weigh on the U.S. economy and American life for longer than initially expected, three Federal Reserve policymakers said on Wednesday.
The U.S. economy began to grow in May and June after taking a monumental hit beginning in March. But growth stalled in July as infections spiked in some parts of the country, leading to fresh restrictions, U.S. central bankers said.
"The issue with the resurgence in the virus is it slowed down or somewhat muted the recovery we’ve been expecting," Robert Kaplan, the Dallas Federal Reserve Bank president, said in an interview with CNN.
The increase in infections has raised the downside risks to the economic outlook and suggests the reopening of the U.S. economy may be more protracted than many initially anticipated, Cleveland Fed President Loretta Mester said in a speech for the Liberal Arts Macroeconomics Conference.
The rising case load offers "a stark reminder that there are several different scenarios that could play out," Mester said.
Jobless Americans and state and local governments will need more aid to make it through the crisis, Kaplan said. Lawmakers missed a deadline last week for extending a $600 weekly supplement to state unemployment benefits, and are in the midst of negotiating another round of stimulus. [nL1N2F71J2]
"I believe the economy needs a continuation of the unemployment benefits," Kaplan said. "It may not need to be in the same form as it currently is, but we need a continuation."
Mester also said more fiscal support is needed to bolster struggling businesses, households and consumers, and she said she was hopeful that Congress will pass a stimulus bill.
"The country has a responsibility to help them over that, to bridge that period, until we can get the economy going again," Mester said during the webinar.
While U.S. economic growth slowed in July, it could pick up in the third quarter and reach pre-pandemic levels by the end of next year, Federal Reserve Vice Chairman Richard Clarida said on CNBC.
"It will take some time, I believe, before we get back to the level of activity that we were in February before the pandemic hit," Clarida said.
Clarida said his personal forecast for the economy hasn't changed because of the recent resurgence of the virus in the United States, since the economic momentum from May through early July was stronger than he expected. He also expects support from another fiscal package should even things out.