Dallas Federal Reserve President Robert Kaplan has stated that the U.S. economic growth will accelerate in 2021 as the country rebounds from the COVID-19 crisis.
“In ’21, we will see an above-trend growth, and we will continue to grind down the unemployment rate,” Kaplan said on CNBC’s “Closing Bell” on Tuesday. “I still believe if we follow these protocols, we would see a rebound from the deep hole we dug in the second quarter.”
“The question is when you get to a normalized economy, and it’s going to depend on the path of the virus and how well we manage it, and the timing of the vaccine,” Kaplan added. “I’m optimistic we will work our way through this. But it would be a lot less costly if we did a good job managing the virus.”
The world economies have had the worst times in decades, as the ravaging coronavirus pandemic has continued to hit the world in different ways. The United States is not an exception to the rule, as the US economy experienced a massive decline. Some economists have predicted that the coronavirus pandemic will put an end to the longest period of economic expansion on record, which ran 128 months—more than a decade—from mid-2009 to early 2020. However, with the ease of lockdown and stimulants put in place by the government, the economy is gradually opening up and figures have indicated a recovery.
Kaplan stated that the most important thing for the economy now is using PPE items. In recent times, several states across the U.S. have witnessed a somewhat unfortunate resurgence in new cases and hospitalizations as the economy reopens.
The Dallas Fed Reserve President also pointed out that the economy will suffer a contraction of between 4.5% and 5% in 2020 due to the unprecedented disruptions caused by COVID-19.
In a bid to cushion the effect of the crisis on the tumbling economy, the Fed has launched a couple of emergency programs that could provide trillions of dollars in liquidity and lending. It has also slashed its key interest rates to zero. When asked about the central bank’s plan to do more to stimulate the economy, Robert Kaplan stated that it has a substantial capacity. However, the priority for the country at the moment is to curb the spread of the virus.
“If we do an outstanding job and a better job managing the virus, we will not need to do as much. That would be better for the country if we didn’t have to,” Kaplan said.
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