Jobless Rate Will Remain Elevated in 2020, Says Fed’s Kaplan
Jobless Rate Will Remain ‘Elevated’ in 2020, Says Fed’s Kaplan
(Bloomberg) -- Although U.S. employment will increase in the coming months, the jobless rate will remain elevated through the end of the year, said Robert Kaplan, president of the Federal Reserve Bank of Dallas.
“We’re on our way down right now,” Kaplan said Sunday in an interview on CBS’s “Face the Nation.” “We’re going to get positive job growth in June, July and from here. Even with that growth, we’re going to end the year with an elevated unemployment rate.”
Kaplan said the rate would end the year at 8% or more. The jobless rate fell to 13.3% in May, surprising economists who had widely expected it to keep rising as the effects of coronavirus-prompted shutdowns continued to ripple through the labor market.
U.S. central bankers held interest rates near zero at a policy meeting last week and signaled they expect to keep them there through 2022 in an effort to help the economy recover from the steepest downturn since the Great Depression. The Fed has announced nine emergency lending programs to keep credit flowing during the pandemic, and Congress has approved about $3 trillion in aid.
Fed Chairman Jerome Powell, in a press conference after the meeting, painted a sober picture of the challenge ahead to bring back the millions of jobs lost during the pandemic. Powell speaks again this week, delivering semi-annual testimony before the Senate Banking Committee on Tuesday and the House Financial Services panel on Wednesday.
Economics of Inequality
Unemployment was expected to fall to 9.3% in the last three months of the year, according to the median projection of quarterly Fed forecasts released June 10. Kaplan said in May that the unemployment rate could hit a peak of 20% in 2020.
With the pandemic hitting the black community hard, the central bank has expressed concern about the unequal nature of the current economic crisis. Although white unemployment fell in May, along with the overall rate, the jobless level of black Americans rose to 16.8%.
“A more inclusive economy where everyone has an opportunity will mean faster workforce growth, faster productivity growth and we’ll grow faster, so I think we’re right to focus on this and bore in on this,” Kaplan said.
“It’s in the interest of the U.S.; the fastest-growing demographics in this country are blacks and Hispanics. If they don’t grow equally then we’re going to grow more slowly.”
Kaplan affirmed the Black Lives Matter movement in a letter published Friday on the bank’s website.
“We stand against racism in all its forms. We will continue to work with the communities we serve to achieve full equity and an inclusive economy for all,” wrote Kaplan and Meredith Black, the Dallas Fed’s first vice president.
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