Fed's Williams says US economy 'nowhere near' full recovery

The US economy is "nowhere near" back to full health, and the outlook is highly uncertain, a top Federal Reserve policymaker said on Wednesday, adding that the central bank's new approach to policy allows it to respond to changes on the ground as needed.

"The good news is that the economy has started to recover and the unemployment rate has come down," New York Fed President John Williams said in remarks prepared for delivery at a virtual Hoover Institution conference. "Despite these improvements, we are nowhere near where we want to be."

The Fed vowed last month to keep interest rates at their current near-zero level until the economy is at full employment, inflation returns to 2% and is headed to rise moderately above that level for some time - a process most Fed policymakers expect to take until at least the end of 2023.

September's unemployment rate of 7.9% was well down from its crisis high of 14.7% but well above its pre-crisis levels. The economy has recouped about half of the 22 million jobs that it lost at the start of the crisis, data show.

The pace of job gains in recent months has slowed noticeably, and many Fed policymakers worry that without a new pandemic relief package soon, the recovery could slow further.

With the pandemic making the economy's trajectory highly uncertain, Williams said, "transparency and flexibility in our policy approach will enable us to respond to changes in the outlook as they happen."