The final impact of the Delta variant of COVID on the US economy is still unknown, Fed chairman Jerome Powell said Tuesday.
“I would say it is not yet clear whether the Delta Tribe will have any important economic impact. We have to see that, ”Powell said during a central bank-sponsored question-and-answer session with students and teachers from across the country.
Economists are divided on how or if some variants of COVID will undermine the strong rebound this year. Fed officials have been preparing to end some of their aid to the economy in the 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 feeling that the variants mean the pandemic may not be over soon.
Some economists note that the Delta variant is spreading mainly in southern states, which are unlikely to order shutdowns of their economies. Last year the Fed had to provide billions of dollars in assistance when the economy collapsed.
The Fed chairman noted that the service sector economy has not yet fully recovered from the depth of the pandemic.
“There are still millions of people who have had these jobs in the service sector and are still unemployed. So this is an important part of the recovery that is far from over, ”he said.