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.
