6/21, 4:19 PM (Source: TeleTrader)
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Fed's Kaplan sees GDP growth to 6.5% as unemployment drops

President of the Federal Reserve Bank of Dallas, Robert Kaplan, spoke at the Official Monetary and Financial Institutions Forum event, saying that analysts at his bank still expect the US GDP to grow to 6.5% in 2021, while the unemployment might drop to between 4% and 4.5%.

Kaplan pointed out that the biggest difference between the pandemic crisis and the last recession in regards to unemployment is that currently, the labor market is struggling with supply, whereas before the issues was demand and job opening. At least 2.5 million workers have decided to retire and 1.5 million people are staying at home as caregivers. Additionally, skilled workers are in deficit, and enrollment in skills training has significantly reduced.

As for inflation, the Dallas Fed forecasts headline PCE inflation to reach 2.4% next year due to structural issues, such as supply shortages, including semiconductors and raw materials. The Bank avoids labeling inflation as transitory or persistent but expects the extreme price pressures to remain through 2022 due to large investments into the electrification, energy, and smart devices industry.

Breaking the News / LH