WASHINGTON (Reuters) – The coronavirus pandemic should ease over the first half of the year and give way to “very strong” U.S. economic growth during 2021, St. Louis Fed President James Bullard said on Wednesday.
“The health crisis will wane in the months ahead” as more people are vaccinated, Bullard said. As it does, families will be able to tap an “exceptionally high” level of savings and financial resources in hand after a year in which government programs pumped trillions of dollars into the economy.
“Monetary and fiscal policies have been especially aggressive, and the associated macroeconomic outcomes have been considerably better than expected,” Bullard said in remarks prepared for delivery at the CFA Society of St. Louis.
About 10% of the U.S. population has received at least one dose of the two-shot coronavirus vaccine. The number of daily new infections has been dropping rapidly, though deaths remain stubbornly high.
Bullard’s bullish outlook suggests the U.S. unemployment rate could fall from the current 6.7% to as low as 4.8% “in the months ahead.” That is higher than the 3.5% seen before the pandemic, but less, Bullard noted, than the median of 5.6% in the period after World War II.
It also puts labor market recovery years ahead of its long climb back after the 2007-2009 recession.
Bullard did not condition his estimates on any further government spending. Congress is currently debating a $1.9 trillion relief proposal from the Biden administration, which some argue could speed hiring even further.
The United States remains about 9 million jobs short of where it was a year ago, and millions have simply left the job market altogether, a group not counted in the unemployment rate.
(Reporting by Howard Schneider; Editing by Paul Simao)
