James Bullard, St. Louis Federal Reserve Bank president, joins 'Squawk Box' by phone to discuss the adjustment period for the U.S. economy amid the coronavirus pandemic.
The U.S. economy is facing a huge shock to the system over the near term then will bounce back strong after, St. Louis Federal Reserve President James Bullard said Wednesday.The central bank official was in the news earlier this week when he forecast that the unemployment rate will skyrocket to 30%, higher than it was even during the Great Depression.
However, he tempered those remarks in his CNBC interview, saying that while the near-term damage will be daunting, it's largely an intentional hit due to efforts to combat the coronavirus and will be unwound quickly. "This number will be unparalleled, but don't get discouraged," Bullard said. "This is a special quarter, and once the virus goes away and if we play our cards right and keep everything intact, then everyone will go back to work and everything will be fine.", Bullard said the $2 trillion or so figure is about right considering the impact the move to shut down much of American commerce will have on production.
He said the unemployment rate indeed will spike but then should settle back to its trend, which had been around a 50-year low. "You'd have this huge spike mostly centered in the second quarter, but everyone knows exactly what that is, that's pandemic relief that's done on purpose," he said. "If we can get this to work right, everything will snap back to normal once this is over."
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