Dallas Federal Reserve President Robert Kaplan said that economic growth in the United States will accelerate next year as the country recovers from the coronavirus crisis.
“In ’21, we will see above-trend growth, and we will continue to reduce the unemployment rate,” Kaplan said on CNBC’s “Closing Bell” on Tuesday. “I still believe that if we follow these protocols, we would see a rebound from the deep hole we dug in the second quarter.”
“The question is when will a normalized economy be reached, and it will depend on the route of the virus and how well we handle it, and the timing of the vaccine,” Kaplan added. “I am optimistic that we will make our way through this. But it would be much less expensive if we did a good job of handling the virus.”
The Fed president said the most important thing for the economy now is to wear face shields. In the past few weeks, many states in the United States have seen a resurgence in new cases and hospitalizations as the economy began to reopen.
Kaplan said the economy will experience a contraction of 4.5% or 5% this year, as the coronavirus caused unprecedented disruptions.
To support the downturn in the economy, the Fed has carried out emergency programs that could provide trillions of dollars in liquidity and loans, while lowering its key interest rates to zero. When asked if the central bank could do more to help the economy, Kaplan said it still has substantial capacity, but that the country’s priority at the moment is to stop the spread of the virus.
“If we do outstanding work and better work managing the virus, we won’t need to do as much. That would be better for the country if we didn’t have to,” Kaplan said.
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