St. Louis Federal Reserve President James Bullard expressed optimism in the pace of the U.S. economic recovery, saying the unemployment rate could fall substantially by the end of the year.
With the current jobless level at a post-World War II high 11.1%, Bullard told CNBC that he could see a rate as low as 7% in a few months.
“I think we’re tracking very well right now,” the central bank official said during a “Closing Bell” interview. “Seems to me like by the end of the year you can get down certainly to single digits, probably even below 8%, maybe 7% by the end of the year.”
That would mark quite a run for unemployment, which was at a 50-year low 3.5% just five months ago before spiking up to 14.7% in April and coming down to its current level in June.
Over the past two months, nonfarm payrolls have risen by 7.5 million as workers began returning to their jobs following the coronavirus-induced shutdown. However, some economists worry that a spike in infections recently could slow that progress.
Bullard said he anticipates that the renewed health scare will make mask-wearing “ubiquitous,” which in turn will reduce the virus threat and boost the economy.
“If we get to that situation, we’ll have the disease under control,” he said. “What I like about that scenario is it does not rely on a vaccine coming or a therapeutic coming. We can use simple, easy technology that we have today, get a good situation, get most of the production back to normal.”
He added that he expects Congress to provide more rescue funding as the Paycheck Protection Program has expired and enhanced unemployment compensation under the CARES Act runs out at the end of the July.
“I would say we’ll get a bill and there will be plenty of resources there,” he said.