Fed’s Bullard Says ‘Full Recovery’ for US in Reach by Year End

James Bullard, president and CEO of the Federal Reserve of St. Louis, gestures during a conference in October 2019. (Luke MacGregor/Bloomberg News)

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Federal Reserve Bank of St. Louis President James Bullard, in the most upbeat comments by a central banker since the start of the COVID-19 outbreak, said the U.S. economy may surge at a 35% annualized rate in the third quarter and the nation may be close to a complete recovery by year-end.

Rapid expansion in gross domestic product in the third quarter “may put the U.S. economy within reach of a sort of ‘full recovery’ by the end of 2020,” Bullard, who doesn’t vote on monetary policy this year, said in comments prepared for a virtual presentation to the Global Interdependence Center Sept. 24.

With real GDP possibly rising at a 10% rate in the fourth quarter, national income at the end of this year would be in reach of the average level for 2019, Bullard said. The comments contrast sharply with those of most other Fed officials, who have strongly urged for more fiscal aid to keep what they see as a tenuous recovery on track.

“These are big numbers, but not outside the realm of possibility,” he said. “I expect this rebound to continue in the U.S. as businesses learn how to produce products and services safely using simple, existing technology.”

‘Considerable Resources’

Speaking in a Bloomberg Television interview earlier this week, Bullard said that he believed the economic recovery would remain on track even without more fiscal aid.

Fiscal support, which has totaled about $3 trillion, has exceeded the actual shortfall in gross domestic product, “so in an aggregate sense there are considerable resources pledged to combat the crisis,” Bullard said in his presentation.

“Simple mortality risk-mitigation strategies hold the promise of delivering higher household incomes along with lower fatalities from COVID-19, thus improving outcomes along both dimensions,” he said. “The downside risk remains substantial and continued execution of a granular, risk-based health policy will be critical in the months ahead.”

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The labor-market outlook is bright, the St. Louis Fed official said.

Many of the layoffs during the pandemic were temporary furloughs so “there is room for a substantial decline in the official unemployment rate in the months ahead.”

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