St Louis Fed President James Bullard warned that US unemployment could surge to 30% in Q2 because of coronavirus shutdown. The number, if realized, would be three times more than the peak in 2007-2009 recession. GDP could contract an unprecedented -50%, with a hit of around USD 2.5T.
But he also noted that this is a “planned, organized partial shutdown” of the economy in Q2. He added, “We are not trying to move production and income up in the second quarter. We are trying to keep it out of the second quarter.” And, “You want capital to just sit in place. Switch off the factory … Then switch it back on.”
Bullard expected activity to rebound quickly ahead. “I would see the third quarter as a transitional quarter,” with the following six months “quite robust” as Americans ramp up consumerism. “Those quarters might be boom quarters,” he said.
