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00:00Yes. Likely to have a strong recovery from the pandemic induced slump in the second half of 2021. However the resurgence of Kobe 19 jeopardizing the next two quarters. That is according to the Federal Reserve Bank of Dallas President Robert Kaplan. He spoke to Bloomberg's Michael McKee of Bloomberg's future of finance. Two thousand of it. My job is is a little easier in some ways. I I. My job is to call out what I think the economy is doing and what would help it and what would hinder it and let policymakers in on the fiscal side make those decisions. And it's clear that. This pandemic has been very unusual in that normally when you have a severe downturn you'll have a drop in household income and you'll have a drop in consumer spending. We didn't see that here. Consumer spending stayed solid mainly due to fiscal stimulus. We're now as we sit here today. We can't tell how much savings is left for people who've lost their jobs how much savings left from fiscal stimulus running out. But it's going to run out. And if we don't renew it we'll see a drop off. We think at some point in household income and consumer spending. So I think policymakers on both sides of the aisle. Elected and appointed officials are very aware of that. So wouldn't surprise me to see some extension of this fiscal stimulus sooner rather than later because in this resurgence we have a millions of people who are making ends meet based on the extension of this fiscal stimulus. If you don't get it it won't just hurt them. It will hurt the entire economy because it will it will weaken consumer spending. Joe Biden said yesterday we're likely headed into a long dark winter because of Kovic but it sounds like you're not as pessimistic. I think the next two quarters are gonna be very challenging very difficult and we're starting to see it. The best way we measure the impact of the resurgence is on mobility and engagement. And we're starting to see it roll over in cities that have a resurgence. El Paso Texas is an example where mobility and engagement is dropped off because the health care system was overwhelmed and they had to institute lockdowns. We're seeing people power through this pandemic and be more willing to engage in their daily activities than we're in April. The danger is that if it if the resurgence gets bad enough where it overwhelms health care systems in various cities they may not have a choice but to institute lockdowns to protect their health care system and people's access. And that's a real downside risk and a danger. But again that's over the next couple of quarters. We're still hopeful as we get through into the spring and we get dissemination or beginning of dissemination of a vaccine. You're going to start to see a better economy. And our estimate by the way for GDP growth for next year is around three and a half percent. But a lot of that growth is back end loaded in the second half of the year. So cautious and concerned about downsides in the short run but optimistic over the horizon.

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Fed's Kaplan: Covid Resurgence Jeopardizes Next Two Quarters

Federal Reserve Bank of Dallas President Robert Kaplan warns that the resurgence of Covid-19 infections poses a significant downside risk to economic growth and expects fiscal stimulus sooner rather than later. He speaks with Bloomberg's Mike McKee on "Bloomberg Markets." (Source: Bloomberg)

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