BOSTON–The president of the Boston Federal Reserve Bank isn’t as optimistic as many others are in forecasting an economic recovery from the coronavirus pandemic.
Boston Fed chief Eric Rosengren, who is an economist, told the Boston Globe he believes the recession will be more troubling and protracted than many other experts anticipate. Unemployment, Rosengren told the Globe, will reach or exceed 10% by the end of June and the U.S. gross domestic product will assuredly contract for two straight quarters.
“The bad news doesn’t end there. Without a clear idea of how long this health crisis will last, Rosengren said there’s no way to properly forecast the extent of the economic crisis,” the Globe reported. “The two are inextricably linked. In fact, he doesn’t expect the economy to bounce back until COVID-19 tests become widely available and widely used.”
People Will be ‘Uncomfortable’
In separate conversations today with its reporters and with the Greater Boston Chamber of Commerce, the Globe reported Rosengren said he believes many people will be uncomfortable about fully participating in the economy — going to the office, taking public transportation, eating out at restaurants — until there is a better handle on who has the virus and who is not infected.
“Until you can test everybody, it’s going to be difficult for the economy to fully come back," Rosengren told the Globe. "As long as it’s in the general population, with many people being asymptomatic, it’s going to be very hard for people to be comfortable … going back to work.”
The Globe noted one other Fed president, James Bullard of the St. Louis Federal Reserve, has forecast the job rate could go as high as 30% on a temporary basis.
Disproportionate Effect
Rosengren told the Globe unemployment, he said, will be disproportionately felt among hourly workers — the people who staff hotels and restaurants, for example. The coronavirus pandemic, Rosenberg told the Globe, will worsen the income inequality in this country that unemployment insurance will not last long enough for many people who need it, and that access to healthcare for lower-wage earners will also be a big problem.
Rosengren told the Globe he does favor the aggressive steps the Fed has taken in recent weeks to ease the flow of credit and cash amid the pandemic.