(Reuters) - Dallas Federal Reserve President Robert Kaplan said on Tuesday he was "cautious and concerned" about downside economic risks in the short run because of the resurgence of the coronavirus, but more optimistic in the longer term.
"The next two quarters are going to be very challenging, very difficult," Kaplan told Bloomberg's Future of Finance virtual conference. "Downside risks are growing with this resurgence."
The United States is experiencing a rise in cases, hospitalizations and deaths from COVID-19, the disease caused by the virus, with some state and local governments reimposing restrictions to slow the spread.
With millions of out-of-work Americans dipping into savings built with government aid distributed earlier this year, Kaplan said, household income and spending will drop off "at some point" unless more fiscal aid is forthcoming.
As long as the pandemic is ongoing, the U.S. central bank should not back away from its programs supporting economic growth, which include bond purchases totaling $120 billion a month and lending programs to corporate America, he said.
Once a vaccine arrives, perhaps next spring, growth will likely rebound, Kaplan said, adding that business contacts have told him they are gearing up for a stronger second half in 2021.