Minneapolis Fed chief: Vaccinations are key to economic recovery

Published 6:50 am Wednesday, February 3, 2021

MINNEAPOLIS — The president of the Federal Reserve Bank of Minneapolis said Tuesday that getting Minnesotans vaccinated against the coronavirus will be key to reviving the state’s economy.

Neel Kashkari told a legislative hearing that the country and state have made progress toward putting people back to work amid the pandemic. The national unemployment rate has fallen to 6.7 percent while the state’s jobless rate is down to 4.4 percent, but he said those figures mask how many people have given up on finding work.

The Minneapolis Fed estimates that the true national unemployment rate is actually around 10 percent, which Kashkari said is as bad as it got in the 2008-09 recession.

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“We just need as many Americans and as many Minnesotans as possible to be vaccinated so that we can have confidence and we can restore much of the economy back to the way it was,” Kashkari said. “ … But it’s really critical right now that the virus is in charge of the economy, and the sooner we can get the vast majority of Minnesotans and the vast majority of Americans vaccinated, the sooner we’ll be able to get back to normal.”

The Minnesota Department of Health on Tuesday reported that 447,610 people had received their first vaccine doses as of Sunday, or 8.1 percent of the state’s population. They include 116,928 people who also have had their second shots, or 2.1 percent of the population. Those numbers put Minnesota roughly in the middle of the pack nationally. The state’s new cases and deaths continue to decline, with 663 new cases and eight new deaths to raise the state’s totals to 463,132 cases and 6,210 deaths.

The department’s infectious disease director, Kris Ehresmann, warned that officials are starting to hear reports about scammers contacting residents with offers to help them get vaccinated quickly. Warning signs include requests for Social Security, credit card or bank account numbers; offers to sell vaccinations at low prices; offers to get on a sign-up list for a fee; or offers to ship doses. In reality, she said, vaccinations are free and are available only from legitimate providers.

Ehresmann also said at a briefing that the population of Minnesotans 65 and older is 918,000, so it will take around 16 weeks to vaccinate them all under current availability projections.

“The bottom line is we just don’t have enough vaccine and everyone is going to need to be patient.”

President Joe Biden told Republican senators Monday night that he’s unwilling to settle on an insufficient coronavirus aid package after they pitched a $618 billion proposal, a fraction of the $1.9 trillion he is seeking. The Minneapolis Fed president avoided giving details of into how big he thinks the next federal stimulus plan should be. But he was broadly supportive of an aggressive federal approach.

“We have the capacity for this wartime spending to support our fellow Americans until we get this pandemic behind us,” Kashkari said. “That doesn’t mean that we can just spend, spend, spend forever and let the debt climb forever and there will never be consequences. But right now this is like a war, and I believe that we have the capacity to do what we need to win the war.”

The consensus among economists now is the recovery from the 2008-09 recession was slower than it had to be because policy makers and the Federal Reserve weren’t aggressive enough, he said, adding that he hopes Minnesota will be aggressive. He cited child care, rural broadband and education as areas where state government could make a difference.

Kashkari said it took 10 years after the last financial crisis to fully rebuild the U.S. labor market.

“That is far too long. the cost to society and the cost to families is far too steep,” he said.