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Boston Federal Reserve President Eric Rosengren believes the coronavirus is a ‘Black Swan’ event that will result in two-quarters of negative GDP growth coupled with a 10 percent unemployment rate for several months, a far cry from the current rate of 3.5 percent.
A dire prediction following the last 24 months of record-low unemployment and one of the tightest job markets in history. Rosengren feels that small businesses may be hit the hardest economically from the coronavirus and if the unemployment rate stays over 10% it will affect consumer demand across the board.
While Fed officials usually refrain from calling a recession, in this case, Rosengren says it may be unavoidable but officials should focus on the rebound.
Rosengren believes that Congress will make a fourth aid package to stimulate the economy and help small businesses. The last package included the Payroll Protection Program (PPP) which gives small business owners the funds to pay employees for up to eight weeks which includes covering benefits.
The program starts on Friday with a scaled-down application that could be filled out online. Any business under 500 employees can file for the loan and receive the money the same day according to a Senior Administration Official. After eight weeks small business owners can go back to the bank and prove their average monthly payroll for 2019 did not drop over the eight weeks of the loan to get the loan forgiven. Senior Administration Officials say no fees will be charged for the loan.
The program, says Rosengren, is a good way to help keep people employed. He adds that we will see a turn for the better in the economy only after we start seeing people have enough faith to take public transportation or sit in a crowded restaurant without the fear of becoming very sick.
FOX Business' Suzanne O'Halloran contributed to this report.