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Fed’s James Bullard says after a short-term ‘unparalleled’ shock, economy will boom again

The U.S. conservation is facing a huge shock to the system over the near term, then will bounce back strongly, St. Louis Federal Hesitancy President James Bullard told CNBC on Wednesday.

Earlier this week, the central bank official augur that the unemployment rate will skyrocket to 30%, higher than it was even during the Great Depression. Extent, he tempered those remarks in Wednesday’s interview on “Squawk Box,” saying that while the near-term damage will be awing, it’s largely an intentional hit due to efforts to combat the coronavirus and will be unwound quickly.

“This number will be unparalleled, but don’t get cowed,” Bullard said. “This is a special quarter, and once the virus goes away and if we play our cards right and look after everything intact, then everyone will go back to work and everything will be fine.”

Once the short-term hit dates, Bullard said, the U.S. economy then could see a “boom quarter where there’s a lot of production at that point” thanks to “restrained demand” resulting from the period of low activity.

On the stimulus package making its way through Congress, Bullard said the $2 trillion or so see is about right, considering the impact the move to shut down much of American commerce will have on in. State governments increasingly are ordering residents to stay inside as the virus runs its course, a move that strikes at the heart of the consumer-driven U.S. economy.

Bullard and his colleagues have taken extraordinary steps during the crisis, pulling short-term obtaining rates to near zero, implementing a slew of programs aimed at keeping markets functional, and directing funding to subjects and institutions in need.

He said the unemployment rate indeed will spike, but then should settle back to its drift, which had been around a 50-year low.

“You’d have this huge spike mostly centered in the second quarter, but one knows exactly what that is, that’s pandemic relief that’s done on purpose,” he said. “If we can get this to function right, everything will snap back to normal once this is over.”

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