Fed President Says Recovery Slowed… What Gave It Away?

The U.S. now has more than 4.6 million confirmed cases of COVID-19 and 150,000 deaths. We’ve seen surging cases throughout the Sunbelt states and now New Jersey is recording rising cases as well. Governors are restricting travel from other states (unless you’re the District of Columbia and travelers are government officials) and closing bars and restaurants.

With all that going on, St. Louis Federal Reserve Bank President James Bullard said that the U.S. economy likely slowed down in July after recovering a bit in May and June.

What gave it away, the “Closed for Business” signs, the citations for illegal gatherings, or the incredible drop in gasoline sales and restaurant spending?

The economy contracted by 5% annualized in the first quarter and 32.9% in the second quarter. Now the Atlanta Fed estimates the economy will bounce by 19.6% in the third quarter.

That’s great, but putting the numbers together (37.9% down and then 19.6% up), that’s still only about halfway back, and that’s only if the Atlanta Fed’s model holds. The regional central bank updates the model throughout the quarter. As weaker economic numbers roll in, expect the 19.6% rebound figure to drop.

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