Amid historically aggressive policies from the US Federal Reserve and Congress, Robert Kaplan, President of the US Federal Reserve from Dallas, said that the most important thing for the economy now is wearing face protection covers.
According to Kaplan, masks in public are key to stopping the spread of coronaviruses, which is increasing in record numbers and threatens to slow down the progress made since the United States was suspended in mid-March.
"The main message I would have today about the economy from here and how to grow it is probably related to the management of this virus," he told Fox Business in a Friday morning interview. "Although monetary and fiscal policies are very important, they are not currently as important as we are doing a good job of smoothing the curve of this virus. If we do that, we will grow faster."
The Fed has launched programs that could provide $ 2.3 trillion in liquidity and credit while lowering the key rate to near zero. At the same time, Congress provided over $ 2 trillion in bailout funds and discussed adding more.
Still, Kaplan said: "The primary economic policy from here is to wear masks and educate people about health protocols."
"If we were all wearing a mask, it would significantly reduce the spread of this disease and we would grow faster," he added. "We would have a lower unemployment rate … and we would be less likely to slow down more of our reopening."
The U.S. recorded nearly 58,836 new Covid 19 cases on Thursday, an increase of 1.9% from the previous day, according to the COVID Tracking Project. Hospitalizations increased 2.1% and deaths increased 0.7% to 125,590.
Measures to curb the virus at home could have caused GDP to drop by up to 35% in the second quarter, Kaplan said. He expects growth to accelerate in the second half of the year, but sees a 4.5% to 5% decline for the year as a whole, which rate is affected by the spread of the virus.