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Delta variant fears could slow labor market recovery, Kashkari says
The president of the Federal Reserve Bank of Minneapolis said on Sunday that fears regarding the highly transmissible delta variant could slow the labor market recovery.
Neel Kashkari, when asked during an interview on CBS's "Face the Nation" what effect the delta variant is having on the economy, said the strain is "creating a bunch of caution."
"Right now we have seven [million] to nine million Americans who are still out of work that we need to get back into the job market. We believe that they're out of work because they've been nervous about COVID, because of childcare issues, because of these enhanced unemployment benefits. So I was very optimistic the fall would be a very strong labor market, with many of those Americans coming back to work," Kashkari told host John Dickerson.
"[I]f people are nervous about the delta variant, that could slow some of that labor market recovery and therefore be a drag in our economic recovery," he added.
Kashkari also argued that the quicker Americans get vaccinated, the "better off" the economy will be.
"The sooner we can get people vaccinated, the sooner we can get delta under control, the better off our economy is going to be," he said.
Kashkari's comments come as the U.S. is seeing a spike in COVID-19 cases, largely driven by the highly infectious delta variant, which is now the dominant strain in the U.S. The majority of hospitalizations and deaths have been among individuals who are not vaccinated.
The economy, however, has been on a steady recovery since the pandemic first began last year.
The U.S. added 850,000 jobs in June, which surpassed expectations. The unemployment rate, though, increased slightly to 5.9 percent.
The labor force participation rate remained stable at around 61.6 percent, an indication that many Americans still cannot return to the workforce.
Roughly 6.4 million Americans did not look for a job in June but wanted to work, which was up from 5 million before the pandemic. These individuals were not included in the unemployed category.
Kashkari told Dickerson on Sunday that wages are increasing at the quickest rate for low-income workers, which he said is a "good thing."
He also predicted that there will be "more of a balance" between businesses and the labor sector when more Americans reenter the workforce, noting that the economy is opening up at a faster pace than workers are looking for jobs.
"I think at the end of the day there's going to be more of a balance between business and between the labor sector once we bring the seven to nine million Americans back to work," Kashkari said.
"So right now, the economy is reopening more quickly than the labor supply is coming online, that mismatch is giving some workers some power. I think they deserve to have some power, but I think it's going to balance out as we get back to normal," he added