A nationwide mask-wearing mandate would accelerate the US's economic recovery, Dallas Fed president says

• A nationwide mask-wearing mandate would slow the coronavirus' spread and boost the US's economic recovery, Robert Kaplan, the president of the Federal Reserve Bank of Dallas, said Friday.
• Additional monetary and fiscal stimulus is important, but adhering to public-health protocols is "the primary economic policy" for helping the US grow faster, Kaplan told Fox Business.
• COVID-19 cases have recently spiked in several states, raising fears of a halted economic bounce-back.
• Goldman Sachs analysts estimated last month that a mask mandate would cut the daily growth rate of infections to 0.6% from 1.6% and spare the US from a 5% hit to gross domestic product.
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Wearing masks to help slow the coronavirus' spread is critical to helping the economy grow faster, Robert Kaplan, the president of the Federal Reserve Bank of Dallas, told Fox Business on Friday.

Surging coronavirus cases across the US have revived concerns of another economic downturn just as data has pointed to a rapid recovery through the end of spring. California, Texas, and Florida have consistently set records in their number of daily new infections and hospitalizations in recent weeks, prompting governors to retract some reopening measures.

Economists now expect the steady hiring and spending trends seen in May to slow as lockdowns are reinstated.

The White House has not implemented a mask-wearing mandate despite the new outbreaks. But widespread mask usage could be the silver bullet to keeping the economic recovery on track, Kaplan said.

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"While monetary and fiscal policy have a key role to play, the primary economic policy from here is broad mask-wearing and good execution of these healthcare protocols," Kaplan said. "If we do that well, we'll grow faster."

A mask-wearing policy would ultimately push the unemployment rate lower and increase the chances of near-term reopenings, he added.

Analysts at Goldman Sachs argued last month that a mask mandate would accelerate the economic bounce-back, saying it could increase the number of mask-wearers by 15 percentage points and slash the daily growth rate of confirmed COVID-19 cases to 0.6% from 1.6%. The nation could dodge a 5% decline in gross domestic product if the executive branch were to implement a mask order, the team led by Jan Hatzius said.

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Kaplan said he sees the national economy severely contracting even after posting strong growth through the second half of the year. Containing the coronavirus is the key factor in deciding whether the economic recovery will taper off or continue at its current pace into 2021, he said.

"My base-case forecast for the year still is we'll wind up contracting in the United States about 4.5% to 5%, but how the virus proceeds and what the incidence is is going to be directly related to how fast we grow," Kaplan said. "But we'll grow. It's just a question of, with this resurgence, is that going to slow down the rate of growth from here?"

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