MNI BRIEF: Fed's Kaplan Says US Still Faces Downside Risks

Dallas Fed chief Rob Kaplan said Monday the U.S. economy continues to face risks as Covid case numbers build while consumers struggle amid a lack of more government aid.

"There are real downside risks because of the virus" and "right now the trends are in the wrong directions" as hospitals could be overwhelmed, Kaplan told the Shreveport-Bossier City Chamber of Commerce. A second risk is the lack of additional fiscal stimulus that could cause households to run out of savings stored away that came from earlier fiscal relief.

"We may have a very challenging fourth [quarter] and first quarter next year," he said. The base case is for a 2.5% contraction this year with expectations that the economy "could grow by as much as 3.5% in 2021," he said, adding that it is also a "precarious time" as eviction bans near an end Dec. 31.