May 11, 2020
St. Louis Fed President James Bullard discussed his outlook for unemployment and GDP during an interview with Yahoo Finance.
On unemployment, Bullard said that he expects more people to file for unemployment insurance claims in the weeks ahead, and that the unemployment rate will likely be higher in the next jobs report. But he reiterated that this is pandemic relief and the idea is to get income to the disrupted workers who have been asked to stay home to control the pandemic.
In terms of economic growth, he expects the major impact to be in the second quarter of 2020. “That’s where you’ll see the very negative GDP number, way outside of anything that the U.S. macroeconomy has experienced, and then behind that you’ll probably see the best growth number that you’ve ever seen as well,” he said.
In addressing a question about possible lasting damage of the health crisis on the U.S. economy, Bullard discussed two historical examples. He noted that the decade following the 1958 pandemic, and the one after the 1918 pandemic, were great decades for the U.S. economy. “So I don’t think there’s any necessary link between pandemics and macroeconomic performance,” he said.
Bullard noted that while the pandemic is disruptive to the economy, it is a known shock. “If we can get the virus under control, we’d be in good shape as far as the economy goes,” he said. He suggested that one way to solve the problem is to have widespread testing across the economy. “From an economic point of view, that’s what would solve this problem, because we want to know that when we’re doing an economic transaction that we’re not going to get sick,” he said.
Having trouble with the video? Watch it here.