(TheLibertyRevolution.Com)- The global spread of the Chinese coronavirus is shutting down national economies left, right, and centre. Throughout the United States, entire cities are shutting down and businesses forced to close to stop the continued spread of the deadly disease.
Last week, the Federal Reserve Bank of St. Louis issued a prediction of the massive economic impact that shutting down the economy will have on the United States. The president of the bank issued a statement in which he predicted an unemployment rate as high as 30%.
James Bullard released revised numbers that show just how serious shutting down economies will be, but that there may be a light at the end of the tunnel…once the lockdown ends.
On Sunday, Bullard predicted that gross domestic product (GDP) over the current quarter may drop by 50%. He also predicted, however, that boom quarters may follow once the economy starts to reopen.
“I would see the third quarter as a transitional quarter,” he admitted. He then predicted that the two quarters following the transition are probably going to be “quite robust.”
What does that mean? Well, short term job losses and major economic disruption, followed by a quick period of growth and a rebalancing of the economy.
Other projections from the Feds suggest that unemployment may reach 32.1%, and 47 million jobs will be lost in total. CNBC reported that the high numbers “reflect the high nature of at-risk jobs that ultimately could be lost to a government-induced economic freeze aimed at halting the coronavirus spread.”
This isn’t the work of the president, of course, but collateral damage in the necessary war against the Chinese coronavirus. St. Louis Fed economist Miguel Faria-e-Castro published a report explaining how they predicted the 47 million figure. By looking at studies relating to American jobs considered “high risk,” economists determined just how many people were at risk of job loss when non-essential businesses get forcefully shut down. One study found that almost 70 million people are in high-risk jobs, and another study showed over 27 million people in “high contact intensity” jobs that require them to be in close proximity to other workers.
“These two numbers were obtained by applying different methodologies and classifications to two different datasets,” Faria-e-Castro wrote. “This means that while there may be significant overlap, each measure will also be capturing some aspects that the other ignores. For this reason, we simply took the average of those two numbers as a point estimate for the total number of workers who will be laid off during the second quarter.”
That’s a lot of people potentially out of work. Unlike recessions of the past, however, this has been caused by a forced shutdown. Once the coronavirus pandemic ends, the American economy could potentially rebound quite quickly.