Federal Reserve Bank of St. Louis President James Bullard said that the U.S. unemployment rate could reach 30 percent in the second quarter because of the coronavirus pandemic, Bloomberg News reported Sunday.
Bullard also said a 50 percent reduction in gross domestic product is possible in the second quarter given the shutdown of business throughout much of the country, which is only expected to increase.
He suggested this would all result in a $2.5 trillion loss in income, and that a huge stimulus would be needed to make up for it.
Bullard’s outlook is more dire than other estimates, though Treasury Secretary Steve Mnuchin told GOP senators during a private meeting this week that it was possible unemployment could reach 20 percent. He later clarified that he was not making an estimate and that he though actions being taken by the government could help the situation.
Lawmakers in the House and Senate are struggling to reach a deal on a huge economic stimulus package. Democrats have raised objection about the measure largely drafted by Republicans, arguing not enough of the benefits would reach workers and families most in need.
Bullard said the Federal Reserve was considering a number of actions to help the economy.
“Everything is on the table,” he said, referring to the Fed’s potential actions for additional lending programs.
Bullard encouraged an aggressive government response, which could lead to the third quarter being a “transitional quarter” and the fourth quarter and first quarter of next year as potential “boom quarters.”
He added that the government’s priority should be to help American workers and businesses across industries, so companies and industries don’t fall into the cracks.
“It is totally stupid to lose a major industry because of a virus,” he said, according to the news outlet. “Why would you want to do that?”
Bullard’s comments follow the worst stocks week since 2008, with massive drops in the Dow Jones Industrial Average.