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Banks

U.S. economic recovery appears to have slowed in July, Fed's Bullard says

FILE PHOTO: St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015. REUTERS/Lucas Jackson/File Photo

(Reuters) - The U.S. economic recovery from the coronavirus-induced recession likely slowed in July after surprising to the upside in May and June, and the trajectory from here is unlikely to be smooth, St. Louis Federal Reserve President James Bullard said on Monday.

Bullard, in a presentation during an online event hosted by the St. Louis Fed’s branch in Memphis, Tennessee, said it appears as though the trough in economic activity occurred in April.

“I think the slowdown in July would be consistent with the idea that we shouldn’t expect a completely smooth transition as you go forward because this is a crisis and there’s going to be ups and downs,” Bullard said.

Bullard said putting too much emphasis on the need for a vaccine could lead more consumers to stay home, prompt an increase in business failures and cause severe damage to the economy.

“You don’t want to cause a depression while you’re causing people to expect a vaccine to suddenly come on the scene and save the day,” he said.

Instead, Bullard pushed for broader use of masks, and more rapidly available testing that can help people feel more comfortable with flying and other activities that requires them to be in close proximity to others.

Speaking to reporters after the event, Bullard said projections show that widespread use of masks can help bring infections and fatalities down to manageable levels throughout the United States.

Bullard said he expects Congress to reach a deal on another aid package for businesses and households affected by the virus, even though negotiations are tense. “The incentives are very strong for both sides to come to a deal, and the question is what exactly would be in that deal,” Bullard said.

Reporting by Jonnelle Marte; Writing by Dan Burns; Editing by Jonathan Oatis and Paul Simao

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