Dallas Fed President: U.S. facing severe contraction in Q2

FILE – This July 15, 2013, file photo, shows a sign for Wall Street outside the New York Stock Exchange. (AP Photo/Mark Lennihan, File)

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UPDATED 12:26 PM PT — Thursday, April 2, 2020

According to the Dallas Fed president, it appears more fiscal stimulus will be needed amid the coronavirus outbreak. On Thursday, Robert Kaplan stated the U.S. economy is facing a severe contraction in the second quarter. He added the path of a rebound is unclear.

Kaplan claimed the measures put in place by Congress so far have acted as relief for the economic pressure amid the outbreak, but stimulus will likely be necessary in the future.

He has said the focus of recovery should be on the consumer.

“The consumer is going to be much more cautious for obvious reasons,” stated Kaplan. “So there’s an open question about what the strength of the consumer is going to be once we get past this virus, we get into the fourth quarter and into 2021.”

He went on to say the Fed expects the unemployment rate to peak in the mid-teens this year and fall back below 10 percent before the end of the year.

In this March 30, 2020 photo, a sign saying that the Jobs Center at the Alaska Department of Labor and Workforce Development office in midtown Anchorage, Alaska, is closed through the end of April is shown. (AP Photo/Mark Thiessen)

Meanwhile, weekly jobless claims have doubled since the last report, hitting another record high amid the coronavirus outbreak. The Labor Department reported 6.65 million Americans filed initial claims for unemployment benefits last week, sharply beating expectations.

Claims are expected to remain high throughout the month after the federal government extended social distancing guidelines through April 30th. Congress passed a phase three coronavirus relief package last week, which included expanded unemployment benefits.

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