James Bullard, president of the St. Louis Federal Reserve Bank
Scott Eelis | Bloomberg | Getty Images
St. Louis Federal Reserve President James Bullard said Wednesday that Friday’s jobs report, which will show how the U.S. unemployment changed in April, will likely be one of the worst in American history.
“I’ve long maintained that the main impact here will be in the second quarter, the negative impact. We’re going to see crazy ADP numbers today and the jobs report will probably be one of the worst ever on Friday,” Bullard told CNBC’s Steve Liesman.
“But that’s kind of expected because you’re using the unemployment insurance program to provide pandemic relief,” he added. “That’s exactly what we want to do.”
Bullard’s comments came minutes before ADP reported that private payrolls shed more than 20 million jobs in April as employers slashed worker positions amid widespread shutdowns and forced government closures to help contain the spread of the coronavirus.
The decline totaled 20,236,000 and represented by far the worst loss in the survey’s 18-year history. Despite the eye-watering number, the 20.2 million wasn’t as bad as the 22 million that economists surveyed by Dow Jones had forecast.
But investors await the Labor Department’s key jobs report on Friday, when economists expect to see the U.S. unemployment rate to have rocketed to 16% in April from 4.4% in March. Dow Jones economists expect nonfarm payrolls to have declined by about 21 million last month.
“The unemployment rate is going to be extremely high. We think 20% isn’t unlikely, could even be higher than that. You’ve also got this PPP program, which has encouraged firms to keep their workers on their payrolls even though they’re not doing that much business,” Bullard said.
“It’s not surprising. It’s a pandemic. It’s a shutdown situation,” he added.
Still, Bullard remains one of the Fed’s more optimistic voices and said he thinks that the U.S. economy may return to speedy growth in the third quarter.
“In the third quarter, it’ll be a transition quarter, but I would expect relatively rapid growth,” he said. “And then, hopefully by the time we get to the fourth quarter, we’ll be finishing up this process.”
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