San Francisco Fed president on pandemic’s ‘incredibly uneven’ impact

SAN FRANCISCO — The technology industry’s strong performance amid an economic downturn spurred by coronavirus lockdowns could be protecting the Bay Area from some of the worst damage of the recession even as brick and mortar businesses struggles and the loss of federal unemployment benefits signal trouble ahead, San Francisco Federal Reserve Bank President Mary Daly said on Wednesday.

Daly said many businesses such as online retailers, tech firms, shipping companies and others have been doing well amid government-imposed lockdowns even as hospitality, bars and other brick and mortar industries face widespread closures. That’s been a “shocking” aspect of the current financial contraction, she said.

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Mary C. Daly, President and CEO of the Federal Reserve Bank of San Francisco, spoke with reporters Wednesday, August 12, about the impact of COVID-19 on the economy. Courtesy of the Federal Reserve Bank of San Francisco 

“It’s been incredibly uneven,” she said. “If you just roll that up to bigger firms, you see that reflected in the stock market.”

Apple’s stock is up almost 87 percent since lockdown orders were imposed in the Bay Area on March 16. Facebook’s stock is up 78 percent during that time, and Alphabet’s stock — the parent company of Google — is up almost 41 percent.

“It looks pretty promising for tech,” Daly said. “There’s not a sense that tech is being challenged right now.”

That’s helped maintain the region’s strong real estate market and to the extent that workers at tech companies are able to shop and spend money locally, they are boosting economic activity in the Bay Area. But Daly said she’s more concerned with brick and mortar businesses that are being harder hit by a pandemic that has gone on much longer than anticipated. That includes gyms and movie theaters, as well as commercial real estate companies those struggling businesses lease from.

Many businesses that in March were hoping to reopen in a few months are starting to close permanently and temporary layoffs are now turning permanent, Daly said, adding that she sees that in her own neighborhood in Oakland.

“Businesses that had a sign that said ‘We’ll be back,’ those signs are gone,” she said.

Daly also told reporters the expiration of the federal government’s $600 boost to state unemployment insurance could mean the loss of income that was helping some families keep up on rent and food.

“It creates the potential for a hole, a little bit of a hole in consumer demand and consumer spending,” she said. “We have evidence that suggests they were spending those resources to pay rent or to buy food or to buy other consumer goods.”

The virus, she said, is dictating the state of the economy right now and Congress will “need to build a longer bridge” across the pandemic for consumers and workers.

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