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Heavy burdens on the job market and the economy

by drbyos
Robert Kaplan

The US central banker expects a massive economic downturn in the spring.


(Photo: Reuters)

Washington According to a leading US currency keeper, the virus crisis will cause the economy and the labor market to collapse. He expects the unemployment rate to rise to low to mid-range between 10 and 20 percent in the spring, Dallas Fed chief Robert Kaplan said on Friday Bloomberg TV.

By the end of the year, it should then level off at seven to eight percent. For comparison: in the end it was 3.5 percent, which practically means full employment.

However, data presented on Thursday, unemployment claims now rose to a record high, indicating a wave of layoffs as a result of the corona crisis.

The head of the St. Louis Fed District, James Bullard, recently put the number of high-risk jobs at 46 million. These are above all jobs with public traffic, i.e. jobs that come into contact with the public.

Kaplan also anticipates a massive economic downturn in the spring. The gross domestic product is expected to shrink in the 20% range over the course of this period, according to his bleak forecast.

Fed chief Jerome Powell expects the economy to pick up again in the second half of the year. In view of the impending economic downturn, the Fed recently decided on a broad-based program to secure, among other things, the credit flow to households and companies.

Kaplan said the Fed is working “wildly” to implement the program. His colleague Raphael Bostic, who heads the Fed branch in Atlanta, told the same broadcaster that he hoped that the Fed’s current measures would boost public confidence.

More: 3.3 million new unemployed: The historic US aid package could be too late. Read more here.

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