St. Louis Fed President James Bullard said the U.S. economy will see “off the charts” growth in the third quarter that will help lift inflation.

“This is the biggest growth quarter of all time in the U.S.,” he said Friday during a moderated discussion with the Boeing Center for Supply Chain Innovation. “It looks like 30% at an annual rate. Crazy number, way off the charts compared to anything we’re used to in U.S. post-war macroeconomic history,” he was quoted by CNBC as saying.

U.S. gross domestic product contracted at a 31.7% annualized pace in the second quarter because of the economic shutdowns instituted to slow the coronavirus pandemic. The Atlanta Fed’s GDPNow tracker is showing the potential for a 32% growth rate in Q3. Meanwhile, the New York Fed Staff Nowcast stands at 14.3% for 2020:Q3 and 5.3% for 2020:Q4.

The Fed hopes its new strategy rolled out last month will sink deep into the minds of the U.S. public, be well understood to involve higher inflation in the future, and prompt people to act accordingly.

However, early word isn't promising.

"No, no and no," comes the answer from research published Friday by the Cleveland Fed that conducted randomized surveys the day before, the day of, and the day after a high-profile speech delivered by Fed Chair Jerome Powell describing the central bank's move to "average inflation targeting."

"Powell’s speech apparently did not reach or register with the vast majority of the population," wrote the research team including University of Texas at Austin professor Olivier Coibion and University of California, Berkeley professor Yuriy Gorodnichenko.

"Even for those who heard news about monetary policy following the announcement, the news had little impact," and left their views about the Fed and inflation "effectively unchanged ... This suggests (the new strategy) is unlikely to provide many of the economic benefits that theory often attributes to it."

The research addresses a problem Fed officials knew could bedevil them as they debated whether to move to a new approach that would allow periods of high inflation to offset the last decade of weak prices, Reuters reported.

Considered optimal in theory as something that could shift people's expectations and cause them to behave in ways that actually produce higher inflation, selling the idea to the public and investors is a different matter.

Many on Wall Street are already taking the Fed's new strategy with a grain of salt, with contracts tied to future inflation showing little change since the Fed's announcement.

To survey respondents in the public at large, it barely registered, with a peak of one third of the respondents polled the day after Powell's speech saying they had heard news, and no significant change in perceptions of inflation or household spending plans.

The survey also revealed broad misunderstanding of the central bank's aims. Though its legal "mandate" and the focus of hundreds of speeches a year is to guarantee maximum employment and stable prices, more respondents said the Fed was in business to ensure a strong dollar and keep borrowing costs cheap for the federal government - two things the Fed says it explicitly doesn't try to do.

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