It will take perhaps another year for the U.S. gross domestic product (GDP) to get back to its pre-pandemic peak, Federal Reserve Vice Chairman Richard Clarida said Wednesday.
"The COVID-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover to its previous 2019 peak," Clarida said in remarks for the virtual annual meeting of the Institute of International Finance.
"It will likely take even longer than that for the unemployment rate to return to a level consistent with our maximum-employment mandate," Clarida said, adding full economic recovery from the COVID-19 recession has a long way to go.
"Although the unemployment rate has declined sharply since April, it remains elevated as of September at 7.9 percent and would be about 3 percentage points higher if labor force participation remained at February 2020 levels," he said, noting additional support from monetary and fiscal policies will be needed.
"Speaking for the Fed, I can assure you that we are committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust and rapid as possible," he said.
Clarida's remarks came as congressional lawmakers and the Trump administration remain deadlocked over the next COVID-19 relief package.
Fed Chairman Jerome Powell has recently urged policymakers to provide more fiscal relief to households and businesses hurt by the pandemic, warning a prolonged slowing economic recovery could trigger typical recessionary dynamics.
The U.S. economy contracted at an annual rate of 31.4 percent in the second quarter of the year, with an uncertain path to recovery amid efforts to control the pandemic.
