Economy

Fed's Kaplan: Unemployment Rate May Stay As High As 8 Pct

In an interview with “Face the Nation,” Dallas Federal Reserve President Robert Kaplan said he expects some recovery in the unemployment rate this year, although it will still likely be very high at the end of the year.

Speaking with reporter Margaret Brennan of CBS, Kaplan said it's likely that the unemployment rate, currently in the mid-teens, will fall some in June, July and onward, resulting from positive job growth. But he said it will still likely end up being around 8 percent at the year's end.

"The issue we have, that I think the chairman talked about a few days ago, is ... even with that growth, we're going to end the year with an elevated unemployment rate," he said, according to CBS. "And that depending on how fast the service sector comes back and people re-engage, we're still going to have an elevated level of unemployment maybe as high, based on my forecast, of 8 percent or more."

He said skills training and helping people find new jobs will become imperative as many people may not be able to return to their old jobs due to various economic conditions.

Kaplan said financial aid decisions by the government would be crucial to helping soften the blow, and he added that some prospective plans to offer people incentives to go back to work rather than more unemployment pay might work.

Brennan inquired about the spiking coronavirus infections in Kaplan's Texas area, to which Kaplan said it would be important for the time being to wear masks and follow social distancing recommendations to hopefully cut back the infections.

"I think the extent we do that well will determine how quickly we recover," he said. "We'll grow faster if we do those things well. And right now, it's relatively uneven."

Lastly, Kaplan addressed the recent social unrest, including protests following the death of George Floyd in Minneapolis. He said the necessity going forward would be to make sure the economy is inclusive to everyone, particularly black and Hispanic Americans who have been disadvantaged in the past.

"For years, blacks and Hispanics have had an elevated level of unemployment versus whites,” he said, according to CBS. “That started to improve dramatically in the last few years. We've now taken a step back as a result of this crisis. But a more inclusive economy where everyone has opportunity will mean faster workforce growth, faster productivity growth, and we'll grow faster."

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