MNI POLICY: Fed's Kaplan May Support Extending 13(3) Programs

--Dallas Chief Raises Unemployment Forecast Amid Covid Outbreak

By Evan Ryser

     WASHINGTON (MNI) - Dallas Fed leader Robert Kaplan said Monday that

emergency 13(3) programs should not be pulled back while unemployment is

elevated and the nation struggles with increased Covid-19 cases.

     With a majority of the Fed's emergency 13(3) programs set to sunset in late

September, Kaplan will look at the employment rate and other labor market

indicators when determining whether he will support their extension.

     "I would not be an advocate of prematurely withdrawing these programs. I'm

going to want to see that we are getting this virus under control, that we are

seeing sustained and healthy growth in the workforce," Kaplan said in a National

Press Club webinar.

     "We are going to have to watch very carefully how we emerge from this

crisis," he said, "because there's a point at which we need to let some of those

programs sunset and show restraint and let normal market functioning take over

and wean off some of these programs."

     --BASIC HEALTHCARE

     The FOMC voter warned that the coronavirus pandemic "could go on longer

than people think. Not just in 2020 but a good part into 2021, until there is a

vaccine or we do a better job following healthcare protocols." Kaplan urged that

everyone wear face masks.

     The recent surge in coronavirus cases across America hasn't changed

Kaplan's forecast for GDP shrinking 4.5% to 5%, this year, but his year-end

unemployment estimate ticked up to 9%-10% from estimates a week prior.

     "There may be more that the Fed needs to do," Kaplan said. Congress also

needs to consider further support including extended unemployment benefits and

grants to state governments, he said.

     With a resurgence of the virus, consumer confidence could be weakened. "You

will have more small business failures."

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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