Despite the coronavirus’ rampant shifts to the U.S. economy, St. Louis Federal Reserve President James Bullard says he doesn’t think the situation is a plummeting “free fall” as others have speculated.
His position is that the economy was doing “quite well” before the unprecedented pandemic hit, and that the crisis was wholly manufactured by outside health concerns rather than by any deficiency in the U.S. economy beforehand. He said the government was “asking people to stay home to invest in national health.”
His opinion was that the sharp rise in unemployment claims (millions week-over-week as of late) means that people have been taking advantage of the government’s financial aid programs, which would keep money flowing overall.
Just weeks ago, Bullard also argued on CNBC that the crisis would ultimately be short-lived and that this was a “special quarter.” He said that once the virus was contained, depending on how the nation responded during this time, people could go back to work and everything would be fine.
The last two weeks have rounded up a total of 10 million unemployment claims across the nation, a sharp rise from any time in recent history as the coronavirus has mandated American life shut down to avoid more infections and deaths from the highly contagious disease.
In late March, the Fed estimated that as many as 47 million people could eventually lose their jobs because of the ongoing shutdown. If that happens, the unemployment rate could hit 32 percent — greater than that of the worst parts of the Great Depression. Bullard said his team’s estimates, which are available at the St. Louis Fed on the economy blog, “suggest the unemployment rate could go anywhere between 10 percent and 42 percent. The 32 percent number is a compromise in the middle.”
But that number didn’t take into account the $2 trillion stimulus package recently passed by the government, which officials hope will offset some of the negative effects of the shutdown.
Bullard said he thought it was a “great thing” that the bill was passed, and that the main goal was to keep everyone paid during this period of turmoil to prevent people from financially drowning.