The U.S. economy could face a historic shock amid the coronavirus pandemic, with a possible 16 percent unemployment rate, hitting levels aligned with the Great Depression from 1929 to 1939, according to a CNBC report.
White House Economic Advisor Kevin Hassett said the economy is dramatically shrinking as many businesses nationwide remain closed. Economic data in the coming months are going to be terrible, he told ABC's “This Week” on Sunday (April 26).
“During the Great Recession, … we lost 8.7 million jobs and the whole thing,” he said, according to a transcript of the program. “Right now, we’re losing that many jobs about every 10 days. …the economic lift for policymakers is an extraordinary one.”
The lockdown due to the coronavirus is “the biggest negative shock that our economy, I think, has ever seen,” Hasset said.
Hassett said he thinks there should be "long-run changes” to debt reduction, but the V-shaped recovery that President Donald Trump is hoping to happen is not likely unless there is more stimulus.
A V-shaped recovery will be dependent on the response of the federal government.
"I … don't think you get it if we don't have another round of really solid legislation," Hassett said.
“…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,” he added.
Paul Ashworth, chief U.S. economist at Capital Economics, said the insured unemployment rate was up 11 percent this past week, translating to “a barely believable” 23 percent when the Labor Department figures the unemployment rate in two weeks, according to the CNBC report. The previous high for the U.S. was 24.9 percent during the Great Depression.
“You’re going to see numbers as bad as we’ve ever seen,” Hassett said, according to CNBC. “GDP growth in second quarter is going to be negative. Wall Street estimates are negative 20 percent, 30 percent. We’ve done something unprecedented, stopped everything, output [has] gone to zero.”
As of Thursday (April 23), another 4.43 million Americans applied for unemployment benefits in the week ending April 18, according the U.S. Labor Department, bringing the total coronavirus-related job losses to around 26 million.