UPDATED 11:46 AM PT — Wednesday, March 25, 2020
According to St. Louis Fed President James Bullard, the U.S. economy will bounce back strong after falling sharply due to the coronavirus. In an interview Wednesday, he said the Central Bank is expecting the unemployment rate to skyrocket as high as 30 percent after months of hovering at a record low.
Bullard noted that short-term hit to the economy will be “unparalleled,” but emphasized this is not a traditional recession as the downturn is being implemented intentionally to stop the spread of COVID-19.
“The whole idea is to hunker down, lie low, let the virus go away, but I guess my point on talking about this is that the numbers will be unparalleled,” he stated. “But don’t get discouraged because this isn’t at all comparable to past events in U.S. macroeconomic history; this is a special quarter and once the virus goes away, if we play our cards right and keep everything intact, then everyone will go back to work everything will be fine.”
Former Fed chair Ben Bernanke reiterated that message in an interview Wednesday, when he said he expects a quick rebound after the sharp downturn.
“If there’s not too much damage done to the workforce, to the businesses during the shutdown period, however long that may be, then we could see a fairly quick rebound,” he explained.
Bernanke said it’s incorrect to compare the coronavirus induced downturn to the Great Depression and said a more accurate comparison is a large snowstorm or natural disaster. He said the Central Bank has made the right moves to sustain the underlying fundamentals of the economy amid this outbreak.