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Federal Reserve VC Richard Clarida: Worst Unemployment Numbers Since The 1940s

Federal Reserve VC Richard Clarida: Worst Unemployment Numbers Since The 1940s



Richard Harris Clarida Federal Reserve Vice Chair Richard Clarida

CNBC Exclusive: CNBC Transcript: Federal Reserve Vice Chairman Richard Clarida speaks with CNBC’s Sara Eisen today to discuss his expectations for the U.S. economy in the next few months

WHEN: Today, Tuesday, May 5, 2020

WHERE: CNBC’s “Closing Bell

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The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Federal Reserve Vice Chairman Richard Clarida and CNBC’s Sara Eisen on CNBC’s “Closing Bell” (M-F 3PM – 5PM) today, Tuesday, May 5th. The following is a link to video of the interview on

Watch CNBC’s full interview with Federal Reserve Vice Chair Richard Clarida

All references must be sourced to CNBC.

SARA EISEN: Joining us now to discuss the economy and actions the Fed has been taking, Federal Reserve Vice Chairman Richard Clarida on the CNBC news line. Mr. Vice Chairman, thanks so much for phoning in.

RICHARD CLARIDA: Glad to be on the show, Sara. Hello.

SARA EISEN: Well, hello. Another day of dismal economic news, and strong stock market. Why do you think the economy is performing so much better than the economy right now?

RICHARD CLARIDA: Well, let’s talk about the economy. And we’re living through the most severe contraction in activity and surge in unemployment that we’ve seen in our lifetimes. You know, and it’s not a typical downturn. And that perhaps is one factor in the markets. You know, we’ve asked people to step back, make an investment in public health. So, this is not a typical recession. It’s going to be a very, very sharp contraction in—certainly in the second quarter. But recovery could begin in the second half of the year. And that today is my forecast. But you know, what we said, Sara, in our statement is this pandemic does pose really considerable risk to the outlook. And the course of the economy is really going to depend upon the course of the virus and the mitigation efforts. What I can say about the Fed is we’re using our full range of tools, our rates, our balance sheet, forward guidance and lending facilities to support the economy through this time. And our policies, we think, will be very important in making sure that the rebound will be as robust as possible. But you know, we’re in for a period of some very, very, very hard and difficult data that we’ve just not seen for the economy in our lifetimes. That’s for sure.

SARA EISEN: So, are you saying though it’s realistic to see a positive print on GDP as soon as the third quarter?

RICHARD CLARIDA: I think that’s certainly in the range of possibility. Again, it’s going to depend on the course of the virus. I mean, there’s a range of views among economists and forecasters out there. But certainly, that’s one that’s a possibility. That is personally my baseline forecast. That’s right. But again, there is enormous uncertainty right now. And again, I’m an economist, not an epidemiologist. And I think we have to be appropriately humble as we are navigating through this period.

SARA EISEN: What about the job picture? What do you think about how high the unemployment rate is going to get? And how many of those jobs can come actually back when economies reopen?

RICHARD CLARIDA: Well, unfortunately, the unemployment rate is going to surge to numbers that again we have not seen probably since the 1940s. We know that from the initial claims data that around 30 million people cumulatively have filed for claims in the last six weeks. And so, the unemployment numbers that we’ll be getting soon are really going to be very, very elevated. As I said, the course of the economy will depend on the course of the virus. There’s a range of scenarios. But there can be a rebound in the economy once businesses reopen and people return to work. But I think realistically it’s going to take some time for the labor market to fully recover from this shock, but that’s very uncertain at this point. But I do think recovery can commence in the second half of the year.

SARA EISEN: Well, in the meantime, the Fed has been putting its measures in place and so has the federal government. We’ve seen actions like PPP and other forms of economic relief. Do you think it’s enough to bridge us to the reopening, to keep people on payrolls and businesses open in a meaningful way? Or is there going to be to have more there if the government in terms of fiscal relief?

FEDERAL RESERVE'S RICHARD CLARIDA: Well, let me talk first about the Fed and then a bit about fiscal policy. As I said, Sara, we’re using all available tools. We’ve cut the policy rate to zero. We said we’re going to keep it there until we’re confident the economy has weathered these events and is on track to achieve maximum employment and price stability. We’re going to continue to purchase treasury and mortgages in amounts needed to support market functioning. And as you and probably your viewers know, and since March 17th, we’ve announced no fewer than nine new facilities to support the flow of credit to households and businesses.

And I like your terminology. That’s what we think. We think we are building a bridge for these facilities until the economy can recover by stepping in and supporting lending. And we’ve seen some evidence, Sara, that just the announcement of these facilities is encouraging the private sector to lend. In particular, we’ve seen a lot of issuance in the corporate market.

But, you know, fiscal policy also plays an essential role. The CARES Act was absolutely essential. Because you know the Fed has lending authority but not spending authority. So, what we can do is we can lend money to companies that are solvent with the expectation that they’ll be paid back. But we can’t transfer income to households and firms. And obviously the CARES Act through paycheck protection and unemployment benefits and other provisions was very, very important to the economy. And it may well be the case depending on how the economy evolves that more policy support will be needed from the Fed and possibly also fiscal policy. It just depends on how this evolves.

WILFRED FROST: Rich, before this crisis, over the past five or six years, there’s been a lot of analysis on how far the ECB and Bank of Japan have gone with their monetary policy. And some criticism of it as well, in part because of the decision to buy corporate bonds and even equities in Japan. How much do you regret the Fed had to go that far this time? Even it was needed, is it a shame that you had to go that far?

RICHARD CLARIDA: Well, I would not use those words. I think that we -- none of us alive today have seen a circumstance like this. And under Chair Powell’s leadership, the community was united that we needed under very unusual and very exigent circumstances, which is the language used in our legislation, that we would set up these facilities. Now they’re temporary. Indeed all the facilities that we have set up are scheduled to expire September 30th of this year in terms of new lending. Obviously any loans we make will remain outstanding. So this is emergency authority. This is an emergency. It is an emergency authority. And at the point that the economy has weathered and recovered from this, we, at the appropriate time, will scale these programs back. So it’s not really a regret. It’s what we need to do given the nature of the shock. And as I said, these are emergency facilities that are very timely and needed at this point and will be scaled back at the appropriate time when we’re through this difficult period.

WILFRED FROST: None the less, do you think there’s going to be a long-term impact on how market participants price risk?

RICHARD CLARIDA: Well, you know, I think that it would be to difficult in a market to forecast something like this pandemic. And again, we think this is an unusual circumstance. We can discuss more the way these facilities are set up. As you know, the Congress in the CARES Act appropriated funds to the Treasury for the specific purpose of vesting in these lending facilities to support the economy through this period. So, there’s a lot of, you know, there’s a lot of structure and legislative language behind these programs.

SARA EISEN: What about the criticism that, you know, the programs that you’ve designed, the nine of them, and the action you’ve taken have really helped Wall Street much more than Main Street? I mean the Fed is familiar with these. We saw it back in ’08, ’09. But the fact the market has soared while unemployment claims are also soaring. The fact the credit markets have cleared up and companies like Carnival can now borrow and yet people are still getting furloughed left and right, losing their jobs. How do you respond to that?

FEDERAL RESERVE'S RICHARD CLARIDA: Well, I think, Sara, the economy is going through – and as Chair Powell said today, this is really a heartbreaking development we’re seeing with -- in particular in the labor market. So, we’re certainly aware and attuned to that. But what I would say about Main Street obviously is supporting the economy and these new facilities providing these programs including the Main Street lending facility that we’ll be launching fairly soon and the other facilities, for example in TALF, in which case we’re going to be supporting consumer credit. Obviously, in our programs we’re buying a lot of mortgage-backed securities and a lot of folks own homes. And so, I think the broader picture is that we are providing support to Main Street and, but, we don’t want to minimize the difficult challenge the economy faces near-term. But we are providing the appropriate support that we can. And we are going to continue to be forceful, proactive, and aggressive until we’re confident that the economy is on the road to recovery, especially for Main Street.

SARA EISEN: So, you’re clearly providing a lot of liquidity to a lot of different companies. What about—I mean, there are always winners and losers, right? You can’t lend to insolvent companies, you can’t take that much risk, junk-rated companies before this crisis. What kind of bankruptcy picture do you think is going to emerge out of this crisis in this country?

RICHARD CLARIDA: Well, I think it’s too soon to tell. I think it’s going to depend upon a number of factors here. In economic downturns, there are those events. We’re in a recession and so some of that is going to be inevitable. I think our focus as policymakers is to make sure the economic recovery when it begins is as robust as possible. But we can’t minimize that we are in a recession here. And, of course, it is a global recession as well and that’s an additional factor.

SARA EISEN: How permanently scarred do you think the U.S. economy is going to be as a result of this pandemic?

FEDERAL RESERVE'S RICHARD CLARIDA: Well, Sara, I think the honest answer is I hope it’s not scarred. I think that there is that risk depending on the depth of this recession and the depth of this recession and depending upon the contours of this recovery. I’m very, very – I’m certainly hopeful and certainly, the Fed is doing everything we can to minimize the amount if any of scarring. But again, as we’ve emphasized given the nature of this shock, it’s going to be essential that fiscal policy also continues to provide support through the economy as well and in particular, that can help to sustain the productive capacity of the economy through this period.

SARA EISEN: If we do head to another shutdown or another downturn or second wave as so many prominent doctors, including Dr. Fauci, say is inevitable in the fall, what else can the Federal Reserve do? You have nine programs. You have rates at zero. Open-ended QE. What other rabbits can you pull out of the hat?

RICHARD CLARIDA: Well, I don’t know about rabbits. But we have a toolkit that we’re deploying now, and we can deploy more as needed in the future, certainly in terms of our lending, certainly in terms of our balance sheet and certainly in terms of our guidance. And you can be assured that we will be doing that.

SARA EISEN: Is there a limit to what the Fed can do?

RICHARD CLARIDA: Well, there is not a statutory limit. Our balance sheet is a decision that we make as a committee under the appropriate guidelines and under the particulars, lending against credit and the expectation that we can repay it. So we can expand those lending programs. You know, Congress appropriated more than 400 billion in the CARES Act to the Treasury for the purpose of investing in these Fed lending facilities. And only be about half of that appropriation has been allocated now so there’s certainly more that can be done on those programs as needed.

SARA EISEN: We appreciate the time, Mr. Vice Chairman, Richard Clarida. Thank you so much.

RICHARD CLARIDA: Thank you, Sara.

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Why letting Medicare negotiate drug prices won’t be the game-changer for health care Democrats hope it will be

A new law will let Medicare bargain for the first time. But a health policy scholar explains why it’s unlikely to make much of a difference in how much…



Drug prices have been soaring in recent years. stevecoleimages/E+ via Getty Inages

Democrats hope their new health care, tax and climate law begins to rein in soaring prescription drug prices.

One of its most touted provisions allows Medicare, America’s health insurance program for seniors, to negotiate some prescription drug prices for the first time, with some calling it “game-changing” and a significant victory over the pharmaceutical industry. Drug manufacturers had stubbornly opposed any governmental regulation of drug prices for decades and are likely to challenge the measure in court.

As a scholar who has published extensively on the politics of health policy, I’m skeptical that giving Medicare the ability to negotiate prices on a handful of drugs will be as transformative as the law’s backers hope. While a good step, it is unlikely to make a significant difference in how much seniors pay overall for medicine.

Fortunately, there are several other provisions in the law that will do much more to meaningfully help seniors struggling with the high cost of prescription drugs.

Why US drug prices are so high

Pharmaceutical innovation over the past few decades has been tremendous. The quick response to the COVID-19 pandemic in terms of vaccine development and treatments perfectly exemplifies the incredible benefits that drug developers have brought to the world.

Yet these developments have come at a high price, particularly in the United States, where each person spends more than US$1,100 a year on drugs – up from $831 in 2013. Indeed, Americans are paying substantially more than residents of similar countries like Germany, the U.K. and Australia – who pay $825, $285 and $434 per person each year, respectively.

People who need specific high-priced drugs are even more adversely affected.

Dulera, an asthma drug, costs 50 times more in the U.S. than the international average. Januvia, for diabetes, and Combigan, a glaucoma drug, cost about 10 times more. Americans shell out, on average, $98.70 for a vial of insulin, compared with the $6.94 Australians pay.

These costs impose a big burden on Americans1 in 5 of whom skip medications because of the cost. Seniors are particularly affected by these problems.

The reasons for high prices are varied, including the overall complexity of the U.S. health care system and the lack of transparency in the drug supply chain. But as I noted in a 2019 article in The Conversation, the biggest reason Americans pay so much more than people do elsewhere is simple: Pharmaceutical companies face no limits setting prices.

Changing the game – a little

The new law, known as the Inflation Reduction Act and signed into law on Aug. 16, 2022, seeks to change that.

The main mechanism to do it is by allowing Medicare to negotiate prices for some of the most expensive drugs. The act gives Medicare the ability to negotiate with drugmakers for 10 drugs starting in 2026 and 20 by 2029.

The law specifies that the medications Medicare is supposed to select must account for most of its spending on drugs and be name brands with no generic equivalents. Research has found that a relatively small number of drugs are responsible for most spending.

Importantly, pharmaceutical companies may face civil penalties and additional taxes on drug sales if they do not comply with the requirements to establish a “maximum fair price” as laid out in the law.

The provision is expected to save the U.S. government about $102 billion over 10 years by allowing it to pay less on prescription drugs for Americans on Medicare – currently 63 million people. The annual savings amount to about 5% of what Medicare currently spends on drugs.

There’s also a separate provision that requires pharmaceutical companies, under certain conditions, to provide Medicare with rebates if drug prices outpace inflation. That measure takes effect this year and is expected to yield $71 billion in savings over a decade.

While the government savings are meaningful, I believe seniors themselves are likely to see only a minor drop in costs as a result of this provision, mainly through slightly reduced premiums and lower out-of-pocket costs.

A Black female pharmacist shows Black senior woman some prescription meds.
Measures in the law Biden just signed should lower prices for many seniors. Marko Geber/DigitalVision via Getty Images

Where the real savings are

The provisions that will make a much bigger difference for seniors lie elsewhere.

Importantly, the new law limits seniors’ out-of-pocket expenses for prescription drugs to no more than $2,000 annually. Previously, there were some restrictions but no limit. This will directly help 1.4 million seniors who exceeded the $2,000 threshold in 2020.

The law also limits how fast premiums for Medicare Part D, which provides premium-based prescription drug insurance, can rise over the next few years and implements a number of other adjustments.

It also extends the Medicare Part D low-income subsidy to 400,000 seniors who previously earned too much to qualify. This program helps people pay for premiums, deductible and copays and has been valued at $5,100 a year.

The legislation also limits the cost of insulin to no more than $35 per month for Medicare recipients only. This amounts to more than $1 billion in annual savings for seniors. Almost 16 million American seniors have diabetes and are likely to need insulin at some point in their lives.

Lastly, it also eliminates out-of-pocket costs for seniors for vaccines – a move that would have saved money for 4.1 million people in 2020.

Broader impact

There are real benefits in the bill President Biden signed into law. The government will save by negotiating prices. Seniors will save through the insulin cap and other provisions.

But I don’t believe Medicare’s ability to negotiate prices will be a game-changing reform.

Besides affecting prices paid by only a slice of Americans, we do not know how aggressively the federal government will seek savings. This particularly applies to any future administration headed up by a Republican president.

The pharmaceutical industry may still manage to limit the impact of price negotiations, since it will be four years before the changes take effect. The industry has a history of skillfully exploiting loopholes and a vast lobbying apparatus to put into that effort.

As for Americans who aren’t covered under Medicare, drug prices may actually go up. That’s because, if pharmaceutical companies do end up reducing drug prices for seniors, they may shift those costs to everyone else to make up for those lost profits.

Simon F. Haeder does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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War, peace and security: The pandemic’s impact on women and girls in Nepal and Sri Lanka

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to improve the lives of women and girls in postwar countries…



Nepalese girls rest for observation after receiving the Moderna vaccine for COVID-19 in Kathmandu, Nepal. (AP Photo/Niranjan Shrestha)

Attention to the pandemic’s impacts on women has largely focused on the Global North, ignoring countries like Nepal and Sri Lanka, which continue to deal with prolonged effects of war. While the Nepalese Civil War concluded in 2006 and the Sri Lankan Civil War concluded in 2009, internal conflicts continue.

As scholars of gender and war, our work focuses on the United Nations Security Council Resolution 1325 on women, peace and security. And our recently published paper examines COVID-19’s impacts on women and girls in Nepal and Sri Lanka, looking at policy responses and their repercussions on the women, peace and security agenda.

COVID-19 has disproportionately and negatively impacted women in part because most are the primary family caregivers and the pandemic has increased women’s caring duties.

This pattern is even more pronounced in war-affected countries where the compounding factors of war and the pandemic leave women generally more vulnerable. These nations exist at the margins of the international system and suffer from what the World Bank terms “fragility, conflict and violence.”

Women, labour and gender-based violence

Gendered labour precarity is not new to Nepal or Sri Lanka and the pandemic has only eroded women’s already poor economic prospects.

Prior to COVID-19, Tharshani (pseudonym), a Sri Lankan mother of three and head of her household, was able to make ends meet. But when the pandemic hit, lockdowns prevented Tharshani from selling the chickens she raises for market. She was forced to take loans from her neighbours and her family had to skip meals.

Some 1.7 million women in Sri Lanka work in the informal sector, where no state employment protections exist and not working means no wages. COVID-19 is exacerbating women’s struggles with poverty and forcing them to take on debilitating debts.

Although Sri Lankan men also face increased labour precarity, due to gender discrimination and sexism in the job market, women are forced into the informal sector — the jobs hardest hit by the pandemic.

Two women sit in chairs, wearing face masks
Sri Lankan women chat after getting inoculated against the coronavirus in Colombo, Sri Lanka, in August 2021. (AP Photo/Eranga Jayawardena)

The pandemic has also led to women and girls facing increased gender-based violence.

In Nepal, between March 2020 and June 2021, there was an increase in cases of gender-based violence. Over 1,750 incidents were reported in the media, of which rape and sexual assault represented 82 per cent. Pandemic lockdowns also led to new vulnerabilities for women who sought out quarantine shelters — in Lamkichuha, Nepal, a woman was allegedly gang-raped at a quarantine facility.

Gender-based violence is more prevalent among women and girls of low caste in Nepal and the pandemic has made it worse. The Samata Foundation reported 90 cases of gender-based violence faced by women and girls of low caste within the first six months of the pandemic.

What’s next?

While COVID-19 recovery efforts are generally focused on preparing for future pandemics and economic recovery, the women, peace and security agenda can also address the needs of some of those most marginalized when it comes to COVID-19 recovery.

The women, peace and security agenda promotes women’s participation in peace and security matters with a focus on helping women facing violent conflict. By incorporating women’s perspectives, issues and concerns in the context of COVID-19 recovery, policies and activities can help address issues that disproportionately impact most women in war-affected countries.

These issues are: precarious gendered labor market, a surge in care work, the rising feminization of poverty and increased gender-based violence.

A girl in a face mask stares out a window
The women, peace and security agenda can help address the needs of some of those most marginalized. (AP Photo/Niranjan Shrestha)

Policies could include efforts to create living-wage jobs for women that come with state benefits, emergency funding for women heads of household (so they can avoid taking out predatory loans) and increasing the number of resources (like shelters and legal services) for women experiencing domestic gender-based violence.

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to achieve the agenda’s aims of improving the lives of women and girls in postwar countries like Nepal and Sri Lanka.

Luna KC is a Postdoctoral Researcher at the Research Network-Women Peace Security, McGill University. This project is funded by the Government of Canada Mobilizing Insights in Defence and Security (MINDS) program.

Crystal Whetstone does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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CDC Announces Overhaul After Botching Pandemic

CDC Announces Overhaul After Botching Pandemic

After more than two years of missteps and backpedaling over Covid-19 guidance that had a profound…



CDC Announces Overhaul After Botching Pandemic

After more than two years of missteps and backpedaling over Covid-19 guidance that had a profound effect on Americans' lives, the Centers for Disease Control (CDC) announced on Wednesday that the agency would undergo a complete overhaul - and will revamp everything from its operations to its culture after failing to meet expectations during the pandemic, Bloomberg reports.

Director Rochelle Walensky began telling CDC’s staff Wednesday that the changes are aimed at replacing the agency’s insular, academic culture with one that’s quicker to respond to emergencies. That will mean more rapidly turning research into health recommendations, working better with other parts of government and improving how the CDC communicates with the public. -Bloomberg

"For 75 years, CDC and public health have been preparing for Covid-19, and in our big moment, our performance did not reliably meet expectations," said Director Rochelle Walensky. "I want us all to do better and it starts with CDC leading the way.  My goal is a new, public health action-oriented culture at CDC that emphasizes accountability, collaboration, communication and timeliness."

As Bloomberg further notes, The agency has been faulted for an inadequate testing and surveillance program, for not collecting important data on how the virus was spreading and how vaccines were performing, for being too under the influence of the White House during the Trump administration and for repeated challenges communicating to a politically divided and sometimes skeptical public."

A few examples:

Walensky made the announcement in a Wednesday morning video message to CDC staff, where she said that the US has 'significant work to do' in order to improve the country's public health defenses.

"Prior to this pandemic, our infrastructure within the agency and around the country was too frail to tackle what we confronted with Covid-19," she said. "To be frank, we are responsible for some pretty dramatic, pretty public mistakes — from testing, to data, to communications."

The CDC overhaul comes on the heels of the agency admitting that "unvaccinated people now have the same guidance as vaccinated people" - and that those exposed to COVID-19 are no longer required to quarantine.

Tyler Durden Wed, 08/17/2022 - 12:22

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