US economy faces historic shock with 16% jobless rate: Expert
White House economic adviser says it requires more stimulus to ensure strong rebound
WASHINGTON : The shuttering of the United States economy due to the Covid-19 pandemic is a shock of historic proportions that will likely push the national unemployment rate to 16 per cent or higher this month and require more stimulus to ensure a strong rebound, a White House economic adviser said on Sunday.
"It is a really grave situation," President Donald Trump's adviser, Mr Kevin Hassett, told the ABC programme This Week.
"This is the biggest negative shock that our economy, I think, has ever seen. We are going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression," Mr Hassett added.
Lockdowns across the US to curtail the spread of the coronavirus have hammered the economy, shuttering businesses and sending unemployment skyrocketing.
A record 26.5 million Americans have filed for jobless benefits since last month, and retail sales, homebuilding and consumer confidence have all cratered.
The non-partisan Congressional Budget Office (CBO) predicts US gross domestic product will contract at nearly a 40 per cent annual rate in the second quarter, with unemployment cresting at 16 per cent in the third quarter. But even next year, the CBO sees the jobless rate still averaging above 10 per cent.
50-YEAR LOW
Before the pandemic struck, the US jobless rate had been hovering at a 50-year low of 3.5 per cent.
"I think the unemployment rate is going to jump to a level probably around 16 per cent or even higher in the next jobs report,"Mr Hassett told reporters at the White House.
The report, providing April employment statistics, is due on May 8.
Mr Hassett added that the second-quarter drop expected in the nation's GDP would be a "big number".
"The next couple of months are going to look terrible. You are going to see numbers as bad as anything we've ever seen before," Mr Hassett said, referring to US economic data.
"We are going to need really big, thoughtful policies to put together to make it so that people are optimistic again," he added.
Mr Trump's advisers want to hone a list of five or six ideas to present to Congress to help clear the economic carnage, Mr Hassett said.
"I am 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," Mr 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.
US Congress has already approved US$3 trillion (S$4.3 trillion) in coronavirus relief in a show of bipartisan support for laid-off workers and an economy in free fall.
The US recorded 1,330 more coronavirus deaths in the past 24 hours, according to figures reported late on Sunday by the Johns Hopkins University.
The country now has a death toll of 54,841, with 964,937 confirmed infections, according to a tally by the Baltimore-based institution.- REUTERS, AFP
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