Minneapolis Federal Bank Head Kashkari: Recovery May Be Longer Than Expected
MINNEAPOLIS (WCCO) -- Minneapolis Federal Reserve Bank President Neel Kashkari warned on Friday that the economic recovery from the COVID-19 pandemic in America will likely take longer than many have predicted.
Furthermore, Kashkari said that if a second wave of novel coronavirus cases does surge forth, it will likely push unemployment figures even higher than they've been thus far.
"The recovery will take longer than we had hoped only a few months ago. Many jobs are going to take a long time to come back," Kashkari said during a Twitter chat with CBS News's "Face the Nation."
Kashkari told CBS News's Margaret Brennan that he believes the true figure of unemployed Americans is actually larger than is being reported, estimating it to be at about 20%.
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Asked if the U.S. Congress should provide further direct payments, extend unemployment boosts, or extend the federal eviction moratorium, Kashkari said no one system is perfect.
"But the unemployment insurance system is pretty good at getting help to those who've lost their jobs. I would start there. Extra assistance perhaps capped at prior wages could eliminate the disincentive to return to work when it's safe," Kashkari said.
Assessing the stability of the banking system, Kashkari said that banks are in a better position now than they were back in 2008, but had some caveats.
"I am concerned the longer this goes on, the more losses banks will face. Large banks have more capital than they had before the '08 crisis, but not enough," Kashkari said. "They should stop paying dividends and raise capital to increase their resiliency. They can essentially inoculate themselves from COVID and should do so now."
