FILE PHOTO: Minneapolis Federal Reserve Bank President Neel Kashkari poses during an interview with Reuters in his office at the bank’s headquarters in Minneapolis, Minnesota, U.S., January 10, 2020. REUTERS/ Ann Saphir
(Reuters) – Keeping workers in their jobs is key to getting the economy out of what is “almost certainly” already a recession as authorities mandate businesses shut and people stay at home to slow the spread of the coronavirus, Minneapolis Federal Reserve Bank President Neel Kashkari said on Thursday.
“One thing we know from 2008, when you had millions and millions and millions of Americans losing their jobs, it took more than a decade to put the labor market back together,” Kashkari said in a webcast conference from his home.
“I’m really pleased that a lot of the action by the federal government and the state governments has been focused on trying to keep workers in their jobs,” Kashkari said, referring to the brand-new $350 billion Paycheck Protection Program, due to be rolled out on Friday to provide small businesses with grants to keep their workers on the payroll. The program is a key part of the $2.2 trillion coronavirus rescue package passed by Congress last week.
In the past two weeks 10 million Americans have newly filed for unemployment insurance, a figure Kashkari called “shocking and disturbing.”
If employees remain attached to their former jobs, he said, the recovery may be faster because companies will be able to restart much more quickly.
If businesses can’t reopen and can’t keep their employees on the payroll, “you would see waves of thousands of business going through bankruptcies (and) that is what would lead to a long, much more shallow recovery.”
Still, Kashkari said, “I am optimistic,” in part because the U.S. Congress overcame political differences to write last week’s rescue package, and lawmakers are already working on additional stimulus.
Reporting by Ann Saphir; Editing by Chris Reese and Chizu Nomiyama