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 probably grow very slowly as new demand is filled by other alternatives. There will still be a key role for fossil fuel. Thank you for that. You said a couple of weeks ago with my marketplace colleague david, at that point you said the economy had pretty much hit bottom. Now we are breaking records for new cases every day, do you still think that weve already seen the worst of the economic fallout from the pandemic . It depends on how the virus unfolds from here. What our work at the dallas fed suggested, the economy did bottom in april, we started to grow again toward the end of april and certainly intimate, that was reflected in the jobs numbers, we saw the job surprise. The ppp probably was one of the biggest elements of that, many businesses, Small Businesses brought people back, one of the ppp loan to be forgiven and we saw that in the may employment numbers, the issue was we were hoping for a meaningful doubledigit growth in the third and Fourth Quarter and i think we were seeing it until the second week in june, what were seen with all of our work with highfrequency data and lots of conversations we are having with businesses, i think growth is slowing and to answer your question, i dont think we will go back, i think it is unlikely we will go back to where we were in early april. The issue is how fast will we grow out of the big decline in the Second Quarter and unfortunately with the resurgence of the disease it is muting the rebound. It is muting the growth. Obviously the virus gets worse and we have further action that needs to be taken beyond whats being taken and that will further mute growth and we are watching a very, very carefully and thats why it led me too callout if we all wore masks, i think thats probably the most important thing we can all do right now to make sure that rebound in growth is not faster, slower. And basically its flowing on all the work that were doing. What do you think is going to be the lasting effect of all the businesses that shut down, reopen and now theyre having to shut down again . Heres what im seeing, i have extensive conversations with Small Businesses, midsize businesses, large businesses, every day every week. For the Small Businesses, a restaurant for example, their business went to 0, they had to shut down, other than for restaurants take our orders, they took the ppp loan, many of them and they brought workers back to the extent that they could, they got the rulon forgiven, they reopened and started to inch up from 25 50 to 75 and as you said there now back trending down, business is slower and they dont have access to the ppp again. Whats going to happen, unfortunately many of the Small Businesses that mightve made it without the resurgence in the virus will not make it. I think you will have more Small Business failures and we are seeing that. In addition, midsize and larger businesses will bring back fewer people, its also causing the businesses to focus more on technology and Technology Enabled destruction to replace workers. The longer that this goes on, the more likely while we still have a rebound in hiring although i dont know how fast it will be unless we contain the virus, the longer this goes on the more likely some workers will not have a job to go back to, they may not have an industry to go back to in many of the workers will need to be retrained and get their skills retooled to find another job in another industry and unfortunately that process takes time. I think the longer this goes on, the harder it will be or the slower to drive down the Unemployment Rate. Thats what i see right now and thats putting very concerned about. You and your colleagues at the fed have said you basically do what you have to do to support the market and support the economy, ill take just a moment to get your thoughts on modern monetary theory. This is an idea that was dismissed by many people when it first started bubbling in the conversation in our living of reallife experiment. Has your thinking changed on this at all as we go through this . Not really. But you are right to say if you asked me about a six month ago or four month ago, the thought of running much more aggressive deficit to Fund Spending with the thought there would not be consequences, i was a skeptic and still an and a skeptic. There is a reckoning that comes with running higher deficits. It is not free. Having said that, were in the midst of that experiment, whether we like it or not we have dramatically increased the national debt, will have larger deficits, the feds has increased the size of the Balance Sheet and there will be ramifications and were working on trying to understand them, ramifications for the dollar, the dollar is the worlds reserve currency and other implications that we will learn about as we go, my only view now that we are in the middle i would like to see us take actions that limit to the extent possible, how much more debt we need to incur and how much more Monetary Policy that we need and thats why when i compare more Monetary Policy and more fiscal policy with more adherence and discipline on following the healthcare protocols, i would far rather, its much more inexpensive for the country to follow the healthcare protocols, they engage in more deficit spending and Monetary Policy to deal with the roads were facing with high Unemployment Rate. Right now were in the middle and were doing a realtime experiment and we will learn realtime about the implications of it. Sainstaying with the Monetary Policy for a bit longer preview set on fox business a few days ago you and your colleagues at the fed have to be mindful of any distortion, your actions might be causing in the market and a lot of people have been talking about the increase in trading and pumping liquidity and what distortions are you seeing in real time and you need to do anything to mitigate those . A couple of things, through our announcement over 13 free programs, Corporate Bonds not only by buying Corporate Bonds and buying Corporate Bonds as index, buying highyield bonds, it has somewhat muted the widening of credit spreads, i think those actions on Corporate Bonds wouldve been necessary in light of the crisis that we are in but i do think we need to be mindful as we work through this crisis and hopefully we get the disease under control and more stability. At the gets very important the Market Pricing signals actively reflect the risk and if you dont have that you have distortion which cause people to take more risk than they should and cause leverage more than they should otherwise and i think may ultimately increase the fragility of the financial system. While in a crisis, you want to do what we can at the fed to make sure the market in the mortgagebacked Security Market works well and theres good liquidity in the Financial Market works well. I am always cognizant that we will have to watch very carefully how we emerge in this crisis because theres no point that we need to let those sunset and show restraint in light normal market function take over and wean off these programs. I think we will be healthier for if we do that, but those are tough judgments to make but their judgments we will need to make. What do you think the argument that were no longer in a free market . I dont think we are at that point but i think some people have been frustrated when they look at credit spreads for example. In their view they dont accurately reflect the risk. And generally they say these risk asset levels seem elevated, i think unfortunately some of those issues, long with being in the middle of a historic decline in gdp and a historic rise in unemployment lost jobs. A number of those actions were necessary, the key is what we do from here, how long does this need to go on for because they do believe for those who say it, i am a believer, we will need to get back to unaided market function without as much intervention from the feds. Were not at that point yet but i thick its wise to be telegraphing as the economy improves, we will be appropriately showing restraint and pulling back some of the programs and its a question of when and what ways thats most appropriate. You say when the economy improves there seems to be two different economies happening at the given moment, whats happening in the markets and whats happening in peoples lives, do you think that your actions are exacerbating, the gap between the market and peoples real lives economies . I would say the difference between the regular economy and the markets, the regular economy is whats going on right now, the stock market for example is a discounting mechanism that has the ability to look at a year, two years, and into the future and the discount those results forward. Ill leave this to market commentators and i used to be in the business in the market and my entire adult life, and ill be careful to talk too much on the markets. But what i am seeing they are looking out a year, two years, three years and looking beyond the time and looking to a time when the virus has received it, either because of management or because of the vaccine and i think that is the disconnect between the markets in the economy, in my experience normally if you see the disconnect, it does not go on indefinitely, and normally will get reconciled and this will too. I think you will see a performance to the economy in a performance to the markets and im expecting that and i think youre already in some cases starting to see it. Black and hispanic people are feeling the worst of the health and economic consequences, we were just talking about the despairs emerging together in it so unequally, what does that mean for what the recovery looks like. I think its a real problem and before this crisis, we had over the last couple of years make Good Progress in narrowing the gap between black and hispanic unemployment and the overall rate of unemployment. The Unemployment Rate for women was less than a High School Degree or less, that had improved all of these approve unrepresented groups in the Participation Rate and an appointment rate have improved, and a lot of that progress and that has been reversed in the last three months, the pandemic has disproportionally affected blacks and hispanics in it has those of lower legen level of education. People who dont have the option to work remotely. What does it mean, it means if we dont address those issues, we will have slower labor force and lower productivity. I talked a lot before the crisis and its Early Childhood literacy and skills training, and in with blacks and hispanics in High School Education and families with a High School Education, if we improve Educational Attainment and skills training for those groups, we will have faster Labor Force Growth and faster gdp growth and better productivity. Gdp is made up and growth in the workforce and productivity and we need those groups to do better and for going to grow faster and drive down the rate of unemployment. This is a big challenge for us and is a challenge for us now and in particular on the skills training now to help people love lost their jobs to get back into the workforce, it is critical that we will grow more slowly and have a higher employment rate. I think that is bad for all of us. Skills training, is super important. Systemic racism in the economy, there seems to be a reckoning happening in many workplaces and a lot of situations in the media where there has been people pushed out of their job with Racial Discrimination in Corporate America as well and what do you think of this moment of reckoning regarding systemic racism and workplaces and what role do you think the bottomup effort has to play in rectifying it. And my public comments, ive been asked a lot about systemic racism, i have not been quick to use that term, i talked a lot and said more positively about inclusion and then i find sometimes using the term systemic racism can have a Chilling Effect on all the parties that we need to get together to address the impact. I dont doubt there systemic racism in the economy and out there but i have not been quick to accuse anyone of that. I do think it is critical that we connect and realize a more inclusive economy where blacks and hispanics can do better and we close the gap between the Unemployment Rate and opportunities in Educational Attainment for blacks, hispanics and the rest of the population is an economy where will grow the labor force faster, improve productivity and grow the economy faster. I think it is critical that we do this and its an urgent challenge now. Some of these issues may be due to peoples practices but others may be due to blind spots and allowing these problems to fester. Particular Early Childhood literacy, allowing Educational Attainment rates to log. We have to address those things now and connected with faster Economic Growth, it is clear it is connected with growing faster. But specifically, if we are going to address inclusiveness in a more inclusive economy, what role do you think the individual level of accountability and workplaces across the country plays into that. It is the role of all of us including me, all of us and our businesses need to go back and look at education in our communities, Early Childhood literacy, what the quality of her school education, how is affecting wax and hispanics. I serve on a board that serves locally in the state of texas, all of the scene to take ownership and in addition in our own Companies Look at diversity of who were hiring, promotions, compensation and all of that are accountable for this. The reason i use the term inclusion, there are many Business Leaders that i work with an eye am one of them that need to do a better job, we all need to do a better job it is not necessarily because some of the Business Leaders are even aware or overtly aware of this happening but i think this moment is an excellent opportunity for all of us to go back and review and be more aware of how her falling down and how we can do better in connected and improve our local economies are making a better country. That is looking at the local economy in many places the state and local jobs are a big part of what keeps the local economy going and you talked earlier about the hit to state and local budgets and what the fed has doing to support those. Can you give me more of an outlook of what you see ahead for state and local budgets and the pandemic and what is going to be for recover recovery. Right now i see that the problems every mayor, local leader, state leader i talked to tells me if there is not relief, Fiscal Relief in the form of grants, they will need to cut back, they will need to make cutbacks in terms of people. Secondly on the school side and on healthcare, states and minutes of polities are being called on to do more, we got the issue we just talked about with more people out of work stresses in local communities, the need to do a good job in our local communities and all the stress by lack of budget availability and unless we address this we will grow or slowly in the recovery will be more challenging. You mentioned earlier there was not a lot of pickup just yet in the mainstream lending facility. Why do you think that is . The challenge is this in creating this program. We had already done the ppp for Small Businesses and that was alone to grant program. In other words you can get your loan forgiven. On the main Street Program, that is purely a loan program, most businesses that i talk with at the outset of the crisis immediately went to the banks to try to get a loan and get as much liquidity as they could. And for those who could they did. The issue with the main Street Program is because its taxpayer money in a loan program, their Credit Conditions, multiples of ebuddy, other Credit Conditions that have to be met if youre going to be eligible for the loan and for a bank to make that loan. So the intersection of those who have not already got loans from the banks and still need one versus the credit quality being good enough that they need the test of the program and the banks are willing to make the loan, the intersection of that is probably somewhat smaller than what people would like to see and in order to expand the intersection would have to mean the program would take more credit risk and be willing to absorb more losses. That is a dilemma and that the balance that has been wrestled with and why there is not much take of the program as people would like. What is the fix for that. The crisis goes on there may be businesses that already got one lending who decide they need more in this program will be there for them and the other thing walked away as we go will some of the credit terms be relaxed, this is a judgment is not for the fed to make, the fed does not get to decide how much loss the taxpayers willing to pay its a judgment for the treasury and congress but that would be the other thing relaxed the credit terms but in doing that, recognize there will be more losses for the program and i understand why those are tough judgments to make. That would be a couple of things that could happen. We have a question, there is a lot of uncertainty in the economy and the job market, what would you say to the average american, not the corporate ceo of how to manage right now, how to think about retirement and saving for the future . I spent mos most weeks talking to people taking phone calls who are worried about their careers and jobs who lost their jobs. If you have lost your job make sure aware of the unemployment and other benefits available for you to get. Im talking to a number of people, if youre a younger person still in school make sure that youre working on improving your education and what jobs are out there so your skill set is going to address the opportunities. For many of my conversations with local officials and heads of the junior colleges and local businesses and leaders we were talking about beefing up as much as possible, skill Training Programs which by the way because of the pandemic people cannot do in person, they have to do remotely but were involved in lots of conversations in my advice that money is well spent money and we need to beef up those programs but for individuals who are going to the hardship, i would say this crisis will eventually come to an end and the thing to do is take it one day at a time, make sure if youre unemployed get your benefits, if you got a job, hang in there, this will not go on forever. But be prepared on the other hand, can go on for longer than people think, not just in 2020 but a part of 2021 until there is a vaccine or until we do a better job following healthcare protocols to make sure that were managing the pandemic. In the last suggestion, where your mask. Where your mask over and over again. Another question from katerina with Bloomberg News and the houston bureau. You see the fed will need to show restraint and pull back its emergency measures. You also say we need to again close the gap between minority and employment rates in the overall rate, where do these two converge. Do you hold off pulling the unfed measures until we reached a certain level in the gap between minority and overall Unemployment Rates . As we judge there are sunset dates for the 133 programs. The question is what will i be looking not to judge how much restraint we should show or whether we should continue on these programs in your question, im going to be looking at the overall Unemployment Rate, im going to look at Unemployment Rate among blacks, hispanics, every group all look at the use six major and i will have to be convinced that were on our way to growing employment at a healthy rate. In a big part of whether mc not, i will have a lot more to do with the advanced of the virus and how well were following healthcare protocols. I will be looking all of that, i would not be an advocate of prematurely withdrawing these programs, i will want to see that were getting the virus under control, that we are seeing sustained and healthy growth in the workforce and i will want to see a number of the issues addressed before i would want to talk about showing restraint. I am not seeing those issues, im not seen that yet. Just a followup, before the pandemic we have the black Unemployment Rate being Something Like double the white and employment rate on a regular basis, would making that determination of whether our economy is on a pathway to a good recovery, will that still be acceptable or do we really need to have the gap be smaller . I think we will need the gap smaller. It is gapped out right now. I want to see forward progress and i want to have confidence that we are growing fast enough and making enough progress that were seen not only that gap get smaller but i want to see better visibility that it will continue to get smaller and improve and as i said im not seen that yet but at a certain point am hopeful we will see it in part of seen the gap get smaller is going to be a much better performance in managing the virus. Are there metrics attached to how you will make that determination and are your fed colleagues on board with that . I think at the dallas fed and across the system weve watch carefully, the Unemployment Rate, Participation Rate of underrepresented groups and we have a number of metrics that we watch and it spent a lot of time in the Community Talking to contacts in the whole range of variables and it comes down to judgment but yes, i think there is good consensus within the fed that these underrepresented groups, we need to see improvement in the mark of the healthy economy will be seeing improvements in a lot of the measures related to underperformance and underrepresented groups. Mark loves you to death so he has a couple more questions for you. In the past the approach of a general election mightve been seen as a principal source of uncertainty for the economy, how do you rate this upcoming election as a source of uncertainty this year. Does it rate with the Economic Cycle and covid19 being so impactful . It is not surprising that you will hear me not comment on politics or the election. I would say for me right now consistent with my other comments that the path of the virus and how well we are managing hospitalizations, incidents of the virus and muting its transmission overshadows a number of other issues we would be normally thinking about. The forefront of Economic Policy right now and Economic Uncertainty has to do with the virus and how well were doing executing healthcare protocols that will allow us to meet the transmission of the virus, that is front and center for me. Mark ask you talk about Infrastructure Spending earlier, is now an ideal time for the federal government to spend or invest in that area now the Interest Rates are at historic lows, are there particular methods of financing such spending to minimize the impact on the federal budget and should include broadband for rural areas or is not ideally a function of private investment. To your point it is our estimate at the dallas fed that the u. S. Is approximately 3 trillion under invested in infrastructure. That includes roads, bridges, as mark mentioned and includes wifi and access to wifi in a number of communities. China by contrast is likely over invested in infrastructure, we think were under invested. One of the positives that comes with rates this low, yes we can finance longlived investments at very low rates. Some of it can be done by the private sector, some of these projects like certain roads make the revenue producing and some might be have to be done by the government or in partnership with the government and the private sector but i think it is a significant opportunity in opportunity to help create jobs and grow faster but in term it will improve productivity in the United States and help us grow faster, i think its a big opportunity, the timing of it will not be as significant until we broke the back of the virus in this pandemic but as redoing that and on her way to growing out of this and we have elevated levels of unemployment, i consumer Infrastructure Spending would be one of several very appropriate actions that we could be taking on the fiscal side. A lot of it was mentioned and could be done with private money not just government money. He also says, women, blacks, hispanics and Young Workers have seen heightened levels of unemployment as of late, is a current downturn exacerbating income inequality and will it take years to recover from those impacts as with the case of the Great Recession . Unfortunately the answer to the question is yes based on the work that we are doing. We think likely when you see a gap increase between black, hispanic, unemployment and the overall Unemployment Rate what goes along with that, yes more income inequality, more wealth inequality and that gap does not serve us well. Weve got 46 million workers in this country that have a High School Education or lower out of 160 million person workforce, the Fastest Growing demographic groups in this country are blacks and hispanics, to the extent that they have better education attainment, they do better in their careers, we will have faster workforce growth and faster productivity growth and faster gdp growth. For those groups to underperform hurts all of us and makes gdp growth slower than it would be otherwise. We have got to address this but the Current Crisis has made these issues worse, we were making progress in the couple of three years leading up to the crisis and unfortunately weve taken a step back and we have to address it. What tools does the fed have in particular to address these things, i understand a lot has to do with fiscal policy but what tools do you have to address these things. Going into the crisis, one tool, because inflation has been muted for the last several years, we were willing and ive been willing to run the economy hotter because i saw evidence that underrepresented groups were being pulled into the workforce and the longer that they stayed in the workforce, we could help close that gap. The other tool, we will have to keep that experience in mind again as were going through this crisis and i think we will want to see those underrepresented groups get back in more fully represented in the workforce. The other tool we have had most of the Federal Reserve banks in the 11th district is a good example, we spent an enormous amount of time in the community as a convene or in a catalyst for programs with Early Childhood literacy, Educational Attainment particular for underrepresented groups and skills training, it is more than jawboning, we do research and we can convene groups and we have the credibility to do it and weve been a catalyst for seeing those issues addressed including wifi into areas that did not have wifi. We have done that being a catalyst for local leaders, Business People and i think its critical that the fed and me as a fed president continued aggressively to play the role in my communities. What do you need congress to do now . I think congress has done a lot up to now with a different legislation and programs. But i go back to what i mentioned earlier, i see Unemployment Benefits are going to need to be expended likely restructure. Maybe to create more incentives to work but they need to be extended and i think again the state and local government and municipality that are right now at the forefront of fighting the pandemic and without relief, budget relief, they are going to need to make cutbacks at the worst possible time while theyre trying to do their job and were trying to grow the economy. Donna has another question, you served on the board of bed bath and beyond which recently announced its closing most of the brickandmortar stores, a story weve heard a lot lately, what do you see the future of retail and how that will affect the economy overall. For better or worse, there is no question that Online Retailing has made harder for brickandmortar retailers to have Pricing Power and to be able to gain market share and i would say this crisis has accelerated that trend and a lot of people maybe including me would prefer to go into a school door but because of the pandemic most people who never tried buying things online have now tried it in many found it works pretty well. So my guess is, this will make it more likely that stores, there will be fewer Retail Stores in smaller amount of retail space, there will be fewer malls, we are already in our analysis over stored in the United States and retail versus most other countries and there is going to be a restructuring in any event before this crisis, this will accelerate that restructuring and make it more likely there will be fewer stores, less retail and less employment at least at the retail level the people who work in stores and that trend will accelerate as a result. Thank you so much for joining us today and thank you to all of our viewers for paying attention to the lifestream, next time i hope we can meet in person so we can give you the mug which we usually do but thank you so much for doing this and i hope you have a good and safe rest of your week. Thank you and think for having me. Everybody wear a mask please. Tonight a special edition of book tv with the focus on history starting at 8 00 p. M. Eastern troy the president ial historian and former aid to president george w. Bush looks at the internal fight that shaped several president ial administrations. Then 60 minutes correspondent John Dickerson talks about his book on the presidency, the hardest job in the world. In Later University of virginia history professor elizabeth bearing argues that during the civil war the north was motivated to liberate instead of conquer the south. Enjoy book tv on cspan2. Book tv on cspan2 has top nonfiction books and authors every weekend. Coming up this weekend sunday at 9 00 p. M. Eastern on after words. Wire Magazine Editor at large discusses his book safe book, the inside story, hes interviewed by author and Financial Times Global Business columnist and at 10 00 p. M. Eastern former speaker of the house offers his thoughts on why President Trump should be reelected with his book true in the american future solving the great problems over time. Watch book tv on cspan2 this weekend. The u. S. House and Senate Return on monday to resume legislative business following the state work. Over the fourth of july holiday. The u. S. House considers a 2021 National Defense authorization act with both expected as early as 11 30 a. M. Eastern. The senate convenes at 3 00 p. M. And they resume debate on the nomination of russell to be the director of management and budget. He has been serving and acting capacity repo since january 2019. The senate limited debate and advanced his nomination on july 2 on a partyline vote of 47 44. At 5 30 p. M. The senate votes on confirmation of the vote nomination. Watch live coverage when they return on cspan and live coverage on the senate on cspan2. The democratic and republican party, the campaign of President Trump and joe biden are adjusting plans for the Political Convention already reshaping the coronavirus pandemic. They will convene for a scaledback convention in milwaukee starting august 17. The republicans meet the following week on tuesday august 25 in jacksonville, florida for their convention. The democratic and Republican National convention, live on cspan beginning monday august 17 and watch anytime on cspan. Org or listen live with the free cspan radio app. Cspan, your unfiltered view of politics. The American Enterprise institute held the discussion on the impact of the coronavirus on the European Union economy and heres a look at various policy measures. Welcome everyone, thank you for joining us and welcome to the American Enterprise
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