St. Louis Fed President Bullard: coronavirus impact will be ‘unparalleled’
Yahoo Finance’s Brian Cheung breaks down St. Louis Fed President James Bullard’s thoughts on the impact of the coronavirus on GDP and unemployment.
Video Transcript
ADAM SHAPIRO: Want to bring you up to the latest here at Yahoo Finance. According to New York Governor Andrew Cuomo, in New York state, they now have 30,000 cases, 12% are hospitalized, 3% of those are in the intensive care unit. As we turn our attention to markets, we are hearing from the Federal Reserve. Past Chairman Ben Bernanke saying he expects to see a quick rebound ahead. But those currently inside the Fed are also talking. Brian Cheung has the latest for us on that.
BRIAN CHEUNG: Hi, Adam. So St. Louis Fed President, James Bullard, spoke with reporters this morning. I was on that call. Had the chance to ask him about what he really sees as the economic impact of the novel coronavirus on the US economy. He said things don't look too great. He does project a 30% unemployment and says that he thinks he would see a health response that it's really shutting off GDP by about 50%. But he said, largely, this is something we have not seen and has historic scale. Here's what he had to say.
JAMES BULLARD: The numbers for the second quarter will be unparalleled compared to US macroeconomic history. I don't think this has to be discouraging because these numbers are not comparable to anything that has occurred in the US economy that we've recorded. It's a special quarter. It's in macroeconomic terms, it's relatively brief to have these extraordinary numbers for just one quarter.
BRIAN CHEUNG: --concerned about the short-term impact. But says that it could just be a one quarter deal and that he could see a transitory period for the third quarter. We had the chance to ask him a little bit about what he thinks about the fiscal stimulus bill that's currently making its way through Capitol Hill right now as we speak.
Keep in mind that bill would include supposedly-- we have to see the details of it-- but supposedly have $454 billion of funding to Federal Reserve programs that would then translate and lever up to over $4 trillion of economic lending. So that could be something worth watching as we still wait to see the full text of that bill.
But Jim Bullard telling reporters that he thinks that's going to be key to the Main Street Business Lending Program that the Federal Reserve floated in that massive announcement on Monday morning before the opening bell. The question now is going to be, how can the Federal Reserve take the money that the Federal Reserve will be getting from this congressional bill and then, hopefully, use it to backstop any more contagion on Main Street.
But for right now, St. Louis Fed President, James Bullard, saying it could be a deep-- it could be a deep drop in GDP. But there is still the opportunity to rebound. Adam.
ADAM SHAPIRO: Brian Cheung, thank you. And for those of you who are watching, you can Google Brian Cheung's name and Federal Reserve Yahoo Finance. You can see all the articles Brian has written about the extraordinary measures the Fed has taken to help the country get through this health crisis as well as this liquidity crisis that we've been experiencing. Brian Cheung is on top of it as he covers the Fed for us.
