May 7, 2020 / 4:34 PM / 19 days ago

Fed's Kashkari sees slow, piecemeal, and rocky recovery

FILE PHOTO: Minneapolis Federal Reserve Bank President Neel Kashkari poses during an interview with Reuters in his office at the bank's headquarters in Minneapolis, Minnesota, U.S., January 10, 2020. REUTERS/ Ann Saphir

SAN FRANCISCO (Reuters) - A quick recovery from the coronavirus crisis is unlikely, Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday, warning that reopening may be a patchwork affair and that a resurgence in infections could necessitate a return to lockdown.

“Long term I am absolutely bullish... but it may be a rocky journey,” Kashkari said in an online discussion held by North Dakota’s department of commerce. “My recommendations for businesses... is to plan for a long journey.”

More than half of U.S. states are beginning to reopen parts of their economies even as infections of the new coronavirus continue to mount and the death toll from the respiratory disease it causes tops 73,000.

Kashkari said that health experts he has consulted say it is unlikely that a good treatment or vaccine will be ready in less than a year or two.

“This is likely going to be a longer ordeal, not just a short shutdown and very quick recovery,” he said, noting that the U.S. fiscal rescue has been largely designed as a short-term measure. “We are going to need to have a very targeted reopening of the economy, on not so much a geographic basis, but more a business-by-business basis.”

An optometrist, he said, might be able to open relatively quickly using masks and seeing patients one by one, while movie theaters may not be able to safely reopen until a vaccine or a therapy is readily available.

Restaurants used to packed dining areas may need to restructure themselves so they can survive with half or fewer of their pre-crisis clientele.

And even then, economic growth won’t follow a smooth path, Kashkari said.

“It may well be as we start to reopen, if the virus flares back up again we may have to reimpose social distancing to make sure that we can flatten it back out,” he said. “There’s a lot of uncertainty.”

Reporting by Ann Saphir; Editing by Chizu Nomiyama

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