Fed's Raphael Bostic: 2020's Second Half Could See Economic Uptick, Second COVID-19 Wave Poses Threat
The Florida Chamber of Commerce held a discussion on the state’s ‘economic relaunch’ Thursday. Its guest speaker expects an economic bounce-back in the second half of the year, compared to the first.
Raphael Bostic is president and CEO of the Federal Reserve Bank in Atlanta. His office was the vehicle by which all $1,200 federal stimulus checks went out to Americans. When he joined the Florida Chamber for a discussion on potential economic recovery, Bostic brought a sunny outlook.
“My outlook for the economy for the rest of 2020 is that the second half is going to be much, much better than the first half,” Bostic told those listening in on the Chamber webinar. “We’ve started to see that already, and in some regards, the rebound has happened a little sooner than I had expected.”
Addressing the Chamber on Thursday, Florida’s second consecutive day posting more than 5,000 new COVID-19 infections in the state, Bostic said he still predicts the economy will continue to strengthen.
“I think we’re going to see those rebounds continue into the third quarter and moving into the fourth quarter as well,” he said.
But Bostic, like many in Florida, has been watching cases rise in the state in recent days – and says the possibility of a second ‘wave’ of coronavirus cases does represent a threat to recovery. That potential threat is mostly based on consumer confidence and behavior.
“People might just throw up their hands and say, ‘You know what? It’s not worth it. I’ll just do my takeout when I want to do my takeout restaurant, I’ll do Netflix instead of going to the movies, and I’ll go to a state park instead of going on a cruise,” Bostic said. “And if that becomes the psychology, I think we’re going to have a different kind of trajectory in the months to come.”
Bostic says a key question when it comes to a potential recovery is, how many job losses be permanent? His office is studying furloughs, and says different potential outcomes will have a big impact on recovery in the big picture:
“There are a couple of possibilities: Furloughed employees come back, and get their jobs and start working again. A second is, only some of them come back, and they may work at reduced levels of intensity. A third is that none of them come back, the furloughed workers don’t come back. And there’s a fourth actually, that we’re going to get new furloughs moving forward.”
In Bostic’s estimation, demand for product across various industries could determine how many workers are called back to their jobs.
Meanwhile, the longtime economist says he doesn’t expect anything to move significantly when it comes to inflation, as a result of COVID-19 impacts.
“I’m not expecting deflation. But what I would say is, inflation has been muted for the better part of 8 years now, and for a long time. Even as our policy stance was quite simulative,” Bostic said. “So, I’m expecting that we’re going to see exactly the same thing moving forward, certainly for the next 6 to 12 months.”
Chamber CEO Mark Wilson says coming soon, the organization will host a five-part webinar series looking at economic justice, and how the private sector can help “be part of the solution” when it comes to racial inequalities in the economy.