Unemployment could reach 30% in the U.S., says St. Louis Fed’s Bullard
Published: March 22, 2020 at 6:52 p.m. ET
‘This is a planned, organized partial shutdown of the U.S. economy in the second quarter. The overall goal is to keep everyone, households and businesses, whole… It is a huge shock and we are trying to cope with it and keep it under control.’
U.S. Jobless Rate May Soar to 30%, Fed’s Bullard Says
Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product.
Bullard called for a powerful fiscal response to replace the $2.5 trillion in lost income that quarter to ensure a strong eventual U.S. recovery, adding the Fed would be poised to do more to ensure markets function during a period of high volatility.
“Everything is on the table” for the Fed as far as additional lending programs, Bullard said in a telephone interview Sunday from St. Louis. “There is more that we can do if necessary” with existing emergency authority. “There is probably much more in the months ahead depending on where Congress wants to go.”
HYPER ALERT: 100% PROOF! 2nd GREAT DEPRESSION PLANNED 30% UNEMPLOYMENT. Mannarino
St. Louis Fed Chair Warns U.S. Unemployment Rate Could Hit 30 Percent Due to Coronavirus
Bullard thinks the government needs to prioritize helping American workers and businesses across all industries, saying, “It is totally stupid to lose a major industry because of a virus. Why would you want to do that?” The House and Senate, however, remain at an impasse in negotiations on the fine details in an economic stimulus package that looks to be worth more than $2 trillion. The White House wanted to have a bill ready for a vote by Monday.
The bill will need to address the $2.5 trillion loss in income in this second quarter as a result of a 50 percent decline in gross domestic product. Bullard forecasts that with an aggressive government aid response, the third quarter could serve as a “transitional quarter” with the fourth quarter and first quarter of next year becoming “quite robust,” or “boom quarters,” as Americans make up for the money they haven’t spent during this down period.
Bullard’s grave assessment of the world’s largest economy underscores the critical need for Congress and the White House to quickly find agreement on a massive aid program. The Fed last week restarted financial crisis-era programs to help the commercial paper and money markets, after cutting interest rates to near zero and pledging to boost its holdings of Treasuries by at least $500 billion and of mortgage securities by at least $200 billion.
“This is a planned, organized partial shutdown of the U.S. economy in the second quarter,” Bullard said. “The overall goal is to keep everyone, households and businesses, whole” with government support. “It is a huge shock and we are trying to cope with it and keep it under control.”
The U.S. central bank bought $272 billion of government debt last week, of the more than $500 billion authorized, which Bullard emphasized should not be seen as a limit.
More if Needed
“This is unlimited and we can go much higher if necessary,” he said. “We are trying to provide as much support as we can to that market.”
Commercial paper funding should provide support for corporations trying to roll over short term debt, Bullard said, and the Fed could look at buying other corporate debt.