April 16, 2020
St. Louis Fed President James Bullard shared his views on the second quarter of 2020 and discussed the idea of universal coronavirus testing to help mitigate the crisis. He made his remarks during a video podcast with the Centre for Economic Policy Research.
Bullard noted that the second quarter of 2020 is basically being written off on purpose to invest in health due to the pandemic. “You’re intentionally slowing down the pace of production of output, and you’re intentionally trying to tell workers to stay at home or use the unemployment insurance program as pandemic relief,” he said, adding that those are objectives during the second quarter.
He estimated that the shutdown policy is costing about $25 billion per day in the U.S. To help mitigate the crisis, he noted that a solution using available technology is to have testing everywhere. “I think that would stop the crisis in its tracks,” he said, “and with these kind of numbers, there’s no reason we can’t set up a pop-up type industry that does exactly this.”
Bullard noted that testing would allow people to pinpoint where the virus is all the time, which would restore confidence. “You have to build the confidence that it’s OK to go back out and participate in the economy the way you normally would,” he said.
He likened the situation to the presence of a shark near the beach. “There’s a shark in the water, and people aren’t going to go back to the beach until you really show them a reason to believe that the shark isn’t in the water anymore,” he said.