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WASHINGTON (Reuters): The shuttering of the US economy due to the coronavirus pandemic is a shock of historic proportions that will likely push the national unemployment rate to 16% or higher this month and require more stimulus to ensure a strong rebound, a White House economic adviser said on Sunday.
“It’s a really grave situation,” President Donald Trump’s adviser, Kevin Hassett, told the ABC program ‘This Week’.
“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” of the 1930s, Hassett added.
Lockdowns across the United States to curtail the spread of the novel coronavirus have hammered the economy, shuttering businesses and sending unemployment skyrocketing.
A record 26.5 million Americans have filed for jobless benefits since mid-March, and retail sales, homebuilding and consumer confidence have all cratered.
The nonpartisan Congressional Budget Office predicts US gross domestic product will contract at nearly a 40% annual rate in the second quarter, with unemployment cresting at 16% in the third quarter. But even next year, the CBO sees the jobless rate still averaging above 10%.
Before the pandemic struck, the US jobless rate had been hovering at a 50-year low of 3.5%.
“I think the unemployment rate is going to jump to a level probably around 16 percent or even higher in the next jobs report,” due on 8 May, providing April employment statistics, Hassett told reporters at the White House.
Hassett added that the second-quarter drop expected in the nation’s GDP would be a “big number.” “I think the next couple of months are going to look terrible. You’re going to see numbers as bad as anything we’ve ever seen before,” Hassett said, referring to US economic data.
“We’re going to need really big thoughtful policies to put together to make it so that people are optimistic again,” Hassett added.
Trump’s advisers want to hone a list of five or six ideas to present to Congress to help clear the economic carnage, Hassett said.
“I’m sure that over the next three or four weeks, everybody’s going to pull together and come up with a plan to give us the best chance possible for a V-shaped recovery,” Hassett told ABC. “I ... don’t think you get it if we don’t have another round of really solid legislation.”
A “V-shaped recovery” is one in which an economy bounces back sharply after a precipitous decline.
The US Congress has already approved $3 trillion in coronavirus relief in a show of bipartisan support for laid-off workers and an economy in free fall.
Lawmakers are now poised for a battle over federal assistance to state and local governments whose budgets have been shattered by a plunge in tax revenue even as they have had to take extraordinary measures during a pandemic that has caused a US death toll approaching 55,000.
