Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the rise of the more contagious Delta variant of COVID-19 might hinder the U.S.’s economic recovery as people might stop looking for work because of it, Bloomberg reported.
Kashkari, while previously going on record as optimistic, said fears of the Delta variant “could slow some of that labor market recovery and therefore be a drag on our economic recovery,” according to Bloomberg.
The rise of the Delta variant has federal officials reassessing their optimism about the end of the pandemic, planning to hold a meeting to assess how to move forward with the near-zero interest rate and other issues. They took steps last week toward rolling back the interest rate eventually, and the Fed is also going to maintain the $120 million in asset purchases until there’s more substantial progress made on inflation and employment.
However, Kashkari said he doesn’t think the U.S. is ready quite yet, according to Bloomberg.
“We’re about a third of the way back from where the hole was in December, so we’ve made progress, but we are still in a deep hole,” Kashkari said, per Bloomberg. “We have 7 [million] to 9 million Americans who are still out of work that we need to get back into the job market.”
The Delta variant’s surge comes just as many businesses were planning to start phasing employees back to work in physical offices. The variant has been spiking in all 50 states and causing coronavirus cases to go back up after a period over the past few months where things seemed to finally be dropping off in that regard.
Kate Lister, president of the employer research firm Global Workplace Analytics, has been speaking with numerous companies, advising them not to be too hasty about returning. She said the date to move employees back in doesn’t have to be set in stone.