WASHINGTON – White House economic adviser Kevin Hassett predicted Sunday the unemployment rate could rise above 20% and the worst job losses would come in “May or June” because of the coronavirus pandemic.
When asked what the “bottom” of the country’s unemployment pain would be, Hassett, the former chair of the Council of Economic Advisers, told CBS’ “Face the Nation” that “to get unemployment rates like the ones that we’re about to see … which I think will climb up towards 20% by next month, you have to really go back to the Great Depression.”
“I’m looking for rates north of 20, sadly,” he added.
The economic situation would be different from the Great Depression, when unemployment soared to 25%, he said, because the country has a better understanding of the cause of the current economic slowdown. He said he hoped to avoid the “policy errors” during the Great Depression that prolonged the economic crisis.
Hassett said jobs would “trough” in May or June, and the unemployment rate would continue to rise because of the filing of unemployment claims.
“We’re burning up initial claims for unemployment insurance right now at a rate of about 3 million a week, running through the rest of the month,” he said. “That’s where the extra unemployment comes from.”
The USA lost 20.5 million jobs in April, and the unemployment rate rose to 14.7%, both record-high numbers as the nation felt the economic effects of the coronavirus. Social distancing measures forced the closures of businesses across the country, leading to employee layoffs and furloughs.
Despite these losses, President Donald Trump’s top economic advisers signaled optimism about the economy’s recovery as some states start to lift lockdowns and reopen their economy. Trump expressed an eagerness to reopen businesses even as critics warned that returning to normal too early could cause the disease to spread.
Hassett said the economy would be able to rebound because of the relief legislation passed by Congress and actions by the Federal Reserve.
“We have bought some time with all the money that we’ve thrown at the economy, and we’ve been using the time to do things like develop treatments, improve our treatments, learn more about social distancing and so on,” he said.
In a Fox News Sunday interview, Treasury Secretary Steven Mnuchin said the “reported numbers are probably going to get worse before they get better, but that’s why we’re focused on rebuilding this economy. We’ll have a better third quarter. We’ll have a better fourth quarter. And next year is going to be a great year.”
White House National Economic Council Director Larry Kudlow said Sunday that the country faces “very difficult numbers,” but “there’s a glimmer of hope.”
“Eighty percent of it (the unemployment numbers) was furloughs and temporary layoffs,” Kudlow said on ABC News’ “This Week With George Stephanopoulos.” “That, by the way, doesn’t assure that you will go back to a job, but it suggests strongly that the cord between the worker and the business is still intact.”
Minneapolis Federal Reserve Bank President Neel Kashkari struck a more pessimistic tone in a separate interview, telling ABC News’ “This Week With George Stephanopoulos,” “What I’ve learned in the last few months, unfortunately, this is more likely to be a slow, more gradual recovery.
“When we look around the world, there’s evidence that when countries relax their economic controls, the virus tends to flare back up again,” he said.