Fed's Kaplan says wearing face masks is key to US economic growth

Daily COVID-19 cases in U.S. have again started to regularly hit record highs

Mask-wearing is key to ensuring a faster economic recovery from the coronavirus pandemic and subsequent lockdown, Dallas Federal Reserve President Robert Kaplan said on Friday.

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"If we all wore a mask, it would substantially mute the transmission of this disease, and we would grow faster," Kaplan told FOX Business. "We would have a lower unemployment rate, we'd grow faster, and we'd be far less likely to slow some of our reopenings. But we've been uneven so far on our mask-wearing."

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Daily coronavirus cases in the U.S. have again started to regularly hit record highs, driven by a resurgence in California, Texas and Florida. Some states have hit pause on their plans to reopen, while others are reimposing restrictions they had previously lifted.

More widespread usage of face masks, which is recommended by the Centers for Disease Control, could be pivotal in aiding the economy's nascent recovery and preventing another devastating shutdown of nonessential businesses.

Although 20 states and Washington have implemented mandates requiring individuals to wear masks in public, there is no national mandate.

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"If there was one recommendation you'd probably hear from me, 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 health care protocols," Kaplan said. "If we do that, we'll grow faster."

Kaplan said he still anticipates the economy to shrink by an unprecedented 35 percent in the second quarter but projected it will grow in the third and fourth quarters, putting the economy on track to shrink by about 5 percent for the year.

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A Goldman Sachs analyst note earlier this week reached a similar conclusion about the efficacy of masks on insulating the economy from further virus-related damage. The Goldman research team, led by chief economist Jan Hatzius, concluded that a national mask mandate would save 5 percent of the nation's GDP, the broadest measure of goods and services produced in the country.

“The economic benefit from a face mask mandate and increased face mask usage could be sizable,” they wrote.

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