White House economic adviser Kevin Hassett said Sunday that he expects the US is going to see an unemployment rate comparable to the Great Depression as a result of the strain the coronavirus has placed on the national economy.
“This is the biggest negative shock that our economy, I think, has ever seen. We’re going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression,” Hassett told ABC’s “This Week.” “During the Great Recession, remember that was a financial crisis around 2008, that we lost 8.7 million jobs and the whole thing. Right now, we’re losing that many jobs about every 10 days.”
While some private economists have projected unemployment at that level, it is striking that such a prediction is coming from a key White House economic adviser.
For the fifth week in a row, millions of American workers applied for unemployment benefits, seeking financial relief as businesses remained shuttered due to coronavirus.
First-time claims for unemployment benefits totaled 4.4 million in the week ending April 18, after factoring in seasonal adjustments, the US Department of Labor said.
Without those adjustments – which economists use to account for seasonal hiring fluctuations – the raw number was 4.3 million.
Hassett painted a dire economic picture for the coming months as a result of Covid-19’s impact on the nation’s businesses, predicting a negative upcoming report on the country’s economic output.
“I think GDP (Gross Domestic Product) growth in the second quarter is going to be negative big number. Wall Street estimates are 20, negative 20, negative 30% at an annual rate. And so that’s because we’ve done something that’s really unprecedented, we basically stopped everything,” Hassett told reporters.
On Wednesday, the Commerce Department will release the nation’s first quarter GDP which will show the initial economic downturn due to the coronavirus. Those figures will show the start of the economic slide, but the major impact will be seen in the numbers reflecting the second quarter GDP, which will be released in July.
Treasury Secretary Steven Mnuchin, meanwhile, painted a more positive outlook. He told reporters Sunday that he believes the economy will begin to bounce back in mid-to-late summer because of the economic activity that he hopes will occur in May and June, as some states begin to reopen.
“This is an unprecedented situation. This is not a financial crisis, this is – we shut down,” Mnuchin told reporters at the White House. “The traditional economic models may work. They may not work.”
“What I do think is, as we open up the economy in May and June, you will begin to see the economy bounce back in July, August, September,” he also said. “And my expectation is that you’ll see an increasing rate of growth in those three months.”
