Richmond Fed President Thomas Barkin said yesterday that unemployment rate could hit double digits. He pointed to the 30 million people working in hospitality, retail, retail and entertainment, which makes up around 20% of total workforce. Shutting down of these industries could lead jobless rate to mid-to-high teens. And, “We’re going to have a tough second and third quarter, that’s for sure.”
At the same time, businesses are already planning their post-pandemic lives, preparing for more resilience to health crisis. “Folks who are in consumer facing businesses are thinking very aggressively about how you can build separation, cleanliness, a health protocol,” into their operations, he added. “People are rethinking supply chains — to diversify them. They have seen the implications of an outage.”
St. Louis Fed President James Bullard said there is “no reason” the economy can’t come back in a “V-shape” rebound. He added that a robust recovery can happen if it’s “managed appropriately”. He pointed to the surge in jobless claims and noted most people believed unemployment rate is “already in the double-digit range”. Though, “ideally, the unemployment rate would spike at a high level then come down again as we get the economy started up again on the other side of this crisis.”
Chicago Fed President Charles Evans said there is a “hopeful possibility” that the sharp recession can be just a “temporary downturn.” But “there are many caveats in the hopeful story line, and many, many things must go right in order to minimize the economic pain.” The biggest risk is that coronavirus “may be with us for a while” and delay the recovery even into 2021.
IMF Georgieva urges UK to extend Brexit transition
IMF Managing Director Kristalina Georgieva urged UK to seek longer Brexit transition. She told BBC radio that “it is tough as it is” with coronavirus pandemic. “Let’s not make it any tougher”. She added, “my advice would be to seek ways in which this element of uncertainty is reduced in the interests of everybody, of the UK, of the EU, the whole world.”
She also hailed the measures taken by the UK government on countering the economic impact of the pandemic. She said, “that very strong package of measures is helping the UK, but given the UK’s sizeable role in the world economy, it’s actually helping everyone.”
The Brexit transition period is set to end on December 31, with a new trade agreement in place. The time frame to reach a deal between UK and EU was already seen by unachieveable by some. But Prime Minister Boris Johnson has repeatedly said before he won’t seek another delay in Brexit.