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Federal Reserve Bank of Boston's President Eric Rosengren speaks in New York on April 17, 2013.

Keith Bedford/Reuters

Federal Reserve officials raised fresh doubts on Wednesday about the durability of the U.S. recovery, while new business surveys highlighted developing risks from the relentless coronavirus pandemic.

In separate appearances, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren and Richmond Fed President Thomas Barkin noted what Barkin characterized as “air pockets” facing the U.S. economy – businesses exhausting existing order books without refilling them, and households facing the end of unemployment benefits and other support.

“Businesses like construction had pretty good pipelines and kept going,” through the first phase of the pandemic Barkin said in webcast remarks to a group of local chambers of commerce in Virginia’s Shenandoah Valley.

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But, “new orders are not coming on line in the same way. We have fiscal payments … that are coming to an end and it is not clear what is going to replace them.” Enhanced unemployment benefits that have proved key to replacing spendable income amid record setting unemployment are due to expire this month.

Facing that “fiscal cliff,” the economy is also grappling with a surge of COVID-19 cases to record levels.

Not all Fed officials are gloomy. St. Louis Fed President James Bullard said on CNBC he felt that face masks will become “ubiquitous” to tame the pandemic, and many lost jobs will be regained by year’s end.

But Bullard may be the outlier among his colleagues at the central bank.

“I do expect unfortunately that the economy is going to remain weaker than many had hoped through the summer and fall,” Rosengren said in a Reuters interview.

Bostic told the Rotary Club of Columbus, Georgia, he was concerned not so much that states in his southern region had tried to reopen too fast, but without due care about how to manage the riskiest activities.

Caseloads are now surging in places like Florida, and high frequency data on small businesses, for example, “are suggesting the energy for reopening businesses and for just general activity is starting to level off,” he said.

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The comments from Fed officials, suggesting the seemingly rapid rebound in jobs, retail sales and some other measures of activity in May and June may not persist, were reinforced in two business surveys released on Wednesday.

In the latest quarterly survey of more than 500 company chief financial officers, conducted jointly by the Atlanta and Richmond reserve banks and Duke University, the finance chiefs on average said they were worried about continued weak demand for their products, and expected job recovery to stall for the rest of the year. Overall optimism among the CFOs did improve compared to the first weeks of the pandemic, though. That is in line with other surveys among households and businesses that suggest people feel the deepest economic risks from the pandemic have been avoided. A quarterly sentiment index published by the Conference of State Bank Supervisors, by contrast, showed community bankers remained deeply pessimistic. The most recent reading was 90, roughly unchanged since the last survey and well below the “neutral” reading of 100. The figure was 122 last fall.

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