Dallas Federal Reserve President Robert Kaplan shared his thoughts on the impact of the coronavirus pandemic on the US economy, stating that it could drive a significant and historic contraction during the current quarter. However, he expressed optimism that recovery after the downturn will begin after Q2 2020, even as unemployment levels are expected to remain at record highs until the end of the year.

According to Kaplan’s estimates, the economy could contract by anywhere between 35% and 40% during Q2, but economic recovery could resume into the second half of the year. Containing the spread of the virus as the economy recovers is crucial to preventing further damage to the economy, and the responsibility for this lies with businesses as well as consumers.

Kaplan made these comments during a virtual discussion, adding, “If people wear masks widely, if we have extensive testing and contact tracing, if businesses and us as individuals follow good procedure, we’re going to grow faster.”

He estimated that while unemployment could start improving into the second half of this year, it could average at around 8% by the end of 2020. Meanwhile, inflation is expected to continue remaining weak and not pick up for at least the next couple of years.