Cspan, created by americas People Television company. As a Public Service and brought to you today by your television provider. The president of the Federal Reserve bank of dallas, robert joined the National Press club for discussion on americas economic recovery during the coronavirus pandemic. Gallant whats needed to turn around the economy including aspirin to prevent the spread of covid19. And to improve consumer confidence. Hello and welcome to the National Press club. We are pleased to welcome robert, president and ceo the bank of dallas. His appointed september 2015. As of management practice and associate at Harvard Business school. He had 23 year career at Goldman Sachs and ultimately named senior director of the firm in 2006. Today, he joins us to talk about what he believes the road to u. S. Economic recovery look like in order for the country to bounce back from the damage done by covid19. Hes going to share his Economic Outlook for the rest of the country and into this year end into 2021. The virtual podium is yours. Thank you everyone for having me here today. Im going to talk for a few minutes as kimberly said, the National Outlook and some of the key things we need to do and key challenges we face. Then i will be happy to take your questions. Let me start with our outlook for 2020. Its our dallas forecast that we will, when they year is over, 2020, the u. S. Economy will have contracted in the range of one half to 5 . When i say annualized, basically multiplied by four and then it is our judgment that we will grow in the Third Quarter as well as the Fourth Quarter, the issue will be how fast, even with the rebound, it is our judgment that we will still wind up contracted for in half 5 and along with that itd be our best judgment that will have an employment rate somewhere between 9 10 , as we look ahead to 2021, we would expect to have above average rate of growth of excess of 3 3 half percent. Even with that, we get to the end of 2021, will have an employment rate of 7 8 . That is all very challenging and while the Unemployment Rate today is approximately 11 , the other gauge of labor slack that we look at is used six, the unemployed plus discourage workers plus people who work parttime who would prefer to work fulltime, that measure right now is about 18 . , all this is to say that we have a substantial amount of slack in the economy, we have a substantial amount of unemployment and we have a big challenge on how to grind down the Unemployment Rate to a lower level in rebound from the holder we had in the Second Quarter. Now Monetary Policy has played a key role as well as fiscal policy, at the early stages of this crisis, we work very hard at the fed to buy Treasury Security mortgagebacked security and try to make sure we have good the quiddity in those markets. In addition we instituted the backing of the treasury in conjunction with the treasury and the congress in a number of socalled 133 programs which were programs aimed at Corporate Bonds, money markets, Municipal Bonds and a whole range of other markets intending to try to make sure that we restored market function and in addition we had a program like the ppp program, most recently the main Street Program which will come back and talk more about that. Which were intended to make sure in addition to stabilizing this Financial Markets that we did what we could to try to make sure there was access to credit for small and mediumsize businesses. As a result of these programs market function has dramatically improved, number of businesses have extended their debt and issue new debt and did what they could to improve liquidity substantial number of Small Businesses access to ppp program in the Mainstream Program has been introduced although there is not substantial takeup and that and maybe we will talk more about that in the q a but our purpose was to make sure the Financial Market worked in there was access to capital. We think from here there may be more that the fed will need to do and certainly we believe there will be a need for more fiscal policy, in particular while Unemployment Benefits may need to be restructured, we think they will need to be continued with a high level of unemployment, maybe in a different form, another 600 will be reexamined but in some form they will need to be continued and in addition another key aspect of fiscal policy that we think would likely be appropriate to aid to state and local government and municipalities who without some Additional Support will need to cut back and actually do layoffs at a time we were trying to grow the economy and reduce the Unemployment Rate. Having said all of that, ive been very vocal for the last number of weeks that the forefront of Economic Policy in the United States at this point is likely healthcare related. And while fiscal and Monetary Policy have a key role to play, there is no question based on conversations ive had extensively with epidemiologist and Infectious Disease expert throughout the United States that if all of us wore a mask, we would likely substantially muted the transmission of this disease and that would translate into us growing faster, we would have higher gdp from here and we would have a lower Unemployment Rate, at this stage in this crisis the resurgence of the virus and how well we contain the virus is likely going to be at the forefront in the most critical aspect of how fast consumers are willing to reengage in a whole range of activities, and in turn will determine how fast we grow. So far, the following of healthcare protocols wearing masks, extensive testing, ability to do Contact Tracing has been uneven throughout the United States and i think part of my job is to say the fed will stand ready on the one hand to do more and we have the capacity to do more and more need for fiscal policy but i think at this stage the forefront of Economic Policy in the United States and the key determinant at this stage of how fast we will grow from here is going to be how well we follow the healthcare protocols. And with those introductory comments, i think i will stop there and go back to kimberly and then i will be ready to take a number of questions from the audience. Thank you so much, im going to get going on the q a and would like to take a moment to remind our viewers, they can submit questions as well and you can join the patient by sending an email to headliners at press. Org, headliners press. Org. Mr. Kaplan id like to start with your point that you made about universal masking, this is something that healthcare officials have been asking for for some time, many other leaders have been calling, what difference does it make when you and your role even the people of Goldman Sachs are calling for Something Like this. For my purpose at points sometimes in the national dialogue, i have heard at times maybe there is some attention between following the healthcare protocols in reopening the economy and growing faster. What i think is very important at my job i dont see attention between those two, im saying the Critical Path on reopening and growing faster is to follow the healthcare protocols. Epidemiologist i have talked to feel that people would be much more likely to be able to go back into stores to get on airplanes, to engage in going to restaurants and engage in leisure and other activities if we have more widespread wearing of mass because they convinced that that will substantially muted the transmission of the disease. If we do not do those things, it will be more likely that we will have to slow the rate of reopening, limit the capacity of things like restaurants which is now happening and we will have greater transmission with this disease. My purpose and part of my job to call out the direct connection between growing faster following the protocols. It is critical, i think for me as a Monetary Policy maker, it is important that i call that out, if we dont do a good job at those things, we will need more monetary and fiscal policy, there would not be as effective as following the healthcare protocols and ive said many times, why not follow these policies and have more discipline and it would be better if we can refrain from having to do substantially more monetary and fiscal policy and i think that is possible if we follow the protocols. I think its critical that i call that out. What does it say about where we are as a country if the argument that wearing a mask leads to faster Economic Growth is a more compelling argument for some than wearing a mask to save lives. I will leave that for others to judge. But i think its important that we call this out. Individual freedoms are important, there are many things that we do in this country wearing seatbelts, not texting when were driving, many other activities that we are very careful about because we know society will work better, the economy will work better and will have more Economic Growth and im setting aside the moral aspects of these arguments and even the impact on fatalities and hospitalization. When i think its critical to say the rate of hospitalizations go up in the death rate continues to be higher than out to be. It will put a Chilling Effect and is having a Chilling Effect on Economic Growth. I see that in all the work that were doing at the dallas fed, i think its critical that i call it out. The ongoing lockdown have been hard for working parents, given where we are right now with the pandemic with the surgeon cases in many places, do you think the school should reopen for employees under Person Instruction in the fall . I will leave that to others, i have two children myself who i would like to see very much back in school in the fall for a lot of reasons. But im sympathetic to the leaders that need to make those talking to School Officials and appointed leaders in my district and around the country to the extent we can mute the transmission and we have the virus raging in certain localities, it will be more challenging. I think its a political question, the reason im asking is in particular the productivity side of things, subtly affecting who can go back to work, who can be working especially women as were finding, is there any other information you can give on the implication on what the strain of working parents is doing to her recovery. Yes students cannot which right now they cannot go to camp, they cannot do other outside activities and childcare is challenging for many families in this country either because of affordability and availability, it means parents have to work at home and some jobs make it more likely to be able to work from home, many jobs where workers dont have the option, theyve got to go into the workplace in order to engage. All of our work shows the extent of higher Educational Attainment level, College Education or better, far more likely to be able to work at home, you have a High School Education or less, youre engaged in the service sector, it is very difficult to productively do your job from home, you may not have the option at all, you have to go back into work physically in order to do your job. If your kids are not in school, that is much harder to do and what it means, we will have lower gdp, lower growth, higher unemployment and we are not able to get the kids back in the school. We have some questions from mark who is a former president of the press club and a senior economic analyst in the Washington Bureau chief at think great. Com. He says a shadow to my fellow jayhawk mr. Kaplan i will take issue with that but we are moving on from there. Question number one, do you have any thoughts about what the most effective forms of fiscal stimulus look like during this time as Congress Considers what to do next. Yes, ill give a shout out back to a fellow jayhawk. In terms of fiscal stimulus, as i mentioned, the two things that i think are the highest priorities based on our work are extension of on Employment Benefits but i understand the Current Program is being discussed in likely needs to be restructured to create more incentive for people to get back to work but having said that the program likely needs to be extended in a mention another thing we are seeing broadly, while municipalities are able to borrow, the borrowing is not going to replace the physical hold they had from lack of tax revenues, most motility and tremendous a poly states, city need to balance their budget, cut back and lay off at a time when we are talking about reopening schools and there is more burden following local state to municipality and Hospital Services and others. I think some fiscal policy, fiscal measures to deal with the loss of revenue so the municipalities dont need to cut back. Thats another thing that comes to mind. Longer run beyond the crisis, i see it will likely need to be at discussion. Infrastructure and other programs, that is further down the road but im sensitive to the first two i mentioned now, particular in the midst of trying to get the virus under control. Mark also asked, do you believe there will be longterm negative impact to commercial real estate if firms and employees learned that working from home can be just as effective for certain kinds of businesses . We are watching that very carefully and we are already seeing lots of companies that im talking to that are questioning everything, how many employees will they need, what will be the disposition of those employees, how much can they use technology, maybe more of them before and how much space do they need. Some come to the conclusion they will want to get back to the office and may need more space because of social distancing and others think they need less of a footprint. That is on the commercial side. We are seeing a very substantial impact on retail real estate, malls, enclosed were prestanding and i would think there is going to be many implications for restructuring of that industry as well as Residential Real Estate and the fact that where we started, i think it is too soon to stay for many businesses and what goes with that, how much will they travel and stay in hotels. My own guess as we get beyond the pandemic, people will get back to traveling in the realize the benefits physically but on the margin they are going to be a lot more receptive to doing things remotely than they were before. That will have an effect on real estate and have an effect on travel to some extent and also on lodging that goes on with travel. A bit more regional, texas has seen an increase justification on the oil industry, compared to a few decades ago. What impact do you see longerterm for your region internation if green Energy Continues to grow and if the marketplace embraces electric vehicles. To marks point, as opposed to 30 years ago today, the Energy Business as a percentage of gdp for the state of texas probably right now between eight and 9 , much lower than it was in previous decades. But still significant. I think most people i talked to in the Energy Business believe that theres going to be substantial growth and alternatives, very substantial. Our research at the dallas fed is consistent with that but we believe the dallas fed even with substantial growth and alternatives you will have some reliance on fossil fuels, substantial alliance for the next 15 50 years. We are right now in this year the u. S. Production is likely to go from 12. 8 Million Barrels a day to the end of last year to 10. 8 Million Barrels by the end of this year. We will have a decline. Many wells are being shot in, many will come back online before the year is over but the decline curve is so rapid we will not drill enough to make up for that decline, cap ex will be down 50 . From here we think will see in the future substantial growth in wind, solar, texas by the way has very substantial deployment of wind power and other alternatives but i think even with a very Aggressive Growth and even with the growth in the electric cars and other modes, we think you will still see the world be reliant on energy and our gas is you will see will u. S. Production may not decline a lot from 10. 8 Million Barrels a day but it will proba