It is easy to dismiss predictions of double-digit unemployment rates when they come from so-called “permabears” or “doomsayers” just looking for a few minutes of airtime on a financial news channel.
It gets a little tougher to shrug off a prediction of the unemployment rate hitting 16%. This is especially true when it comes from inside the White House.
So it was a little unnerving on Sunday when White House economic advisor Kevin Hassett warned that we could soon be facing unemployment levels not seen since the Great Depression nearly a century ago.
Talking with reporters, Hassett said “we see an unemployment rate that approaches rates we saw during the Great Depression. During the Great Depression we lost 8.7 million jobs in the whole thing. Now we’re losing that many every 10 says, so the lift for economic policy makers is an extraordinary one.”
Hassett is referring to the incredible job losses reported over the last few weeks. Those have totaled to nearly 27 million in the last five weeks or nearly 5.5 million per week.
Unemployment Is Not Looking Good Yet
The economic data for the next few months is “going to be terrible,” he goes on to add. He said so as the country attempts to recover from shutting down the economy to slow the spread of the coronavirus. Hassett calls this “the biggest negative shock that our economy I think has ever seen.”
He also says that how quickly the economy recovers is based on the next policy response from the government.
Speaking with ABC News, Hassett said, “Over the next three to four weeks, everyone will pull together to come up with a plan to give us the best chance possible for a V-shaped recovery.”
He adds that previous legislation like the small business loans and loans for the airline industry have laid the groundwork. The work, however, isn’t done.
“What we’ve done with the previous legislation is built a bridge hopefully to the other side of the disease, but then we have to make sure we have what it takes to prosper.”
He followed with a stern warning. “You’re going to see numbers as bad as we’ve ever seen. GDP growth in the second quarter is going to be negative. Wall Street estimates are negative 20%, 30%. We’ve done something unprecedented, stopped everything, output [has] gone to zero.”
There’s Still Hope
Hassett does point out a silver lining in all this. While economic output is zero, one positive indicator is that incomes have stayed relatively high.
“If the virus does start to go away in a way that makes it so that most every state feels comfortable that it’s safe to open up, then we really could be looking at a rapid recovery because the incomes are still there,” he added.
We’ll find out how much closer the country is inching towards a double-digit unemployment rate this Thursday. On that day, the latest initial jobless claims figure is announced. Expectations are for another 3.5 million Americans to have filed for unemployment last week.
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