Americans are constantly searching to find out if there will be a phase four coronavirus stimulus package involving a second round of checks. Based on what we’re hearing, there may indeed be a phase four package, but the details of that package could differ widely depending on what Republicans and Democrats can agree on.
The Federal Reserve is urging lawmakers to pass a phase four coronavirus stimulus package, but that doesn't necessarily mean a second round of checks for everyone.
In an interview on CNBC's Squawk Box, Dallas Fed President Robert Kaplan called for another coronavirus stimulus package. He said more is needed to revive the economy. He said he's watching as states start to reopen their economies. Kaplan also said success in reopening may not mean the number of cases declines, but it does mean that number doesn't spike.
At a time when Republicans and Democrats are split over the possibility of another coronavirus stimulus package, the Fed is siding with the Democrats. Specifically, Kaplan suggested that lawmakers may need to pass aid for state and local governments. Fed Chairman Jerome Powell has said previously that lawmakers must provide more aid for the struggling economy.
Kaplan told CNBC that the Fed has already done a lot to ensure that companies have access to capital. However, he also emphasized that the capital represents loans from the lender of last resort that serve as a bridge to recovery.
He expects unemployment to peak at around 20% and end the year with an unemployment rate as high as 10%.
Stimulus won't do everything
Kaplan also said the recovery won't be as strong as it could be until people become more comfortable doing the things they normally do. He warned that states could reopen, but people probably won't resume all of the same activities they did before the pandemic. Kaplan emphasized the need for contact tracing, COVID-19 testing and good procedures for managing the virus.
He said the government can't stimulate behavior with more money or legislate a return to normal behavior. As a result, he feels testing and contact tracing are an important piece of the puzzle for getting people to resume all of their normal activities.