Mnuchin warns virus could yield 20% jobless rate

WASHINGTON — Treasury Secretary Steven Mnuchin raised the possibility with Republican senators that U.S. unemployment could rise to 20% without government intervention because of the impact of the coronavirus, according to people familiar with the matter.

Mnuchin discussed the scenario with the lawmakers Tuesday as he proposed an economic stimulus of $1 trillion or more.

He told the senators that he believes the economic fallout from the coronavirus is potentially worse than the 2008 financial crisis.

Extraordinarily high unemployment, he said, is a possibility if lawmakers don’t swiftly provide financial assistance to wage workers and small- and mediumsized businesses.

“During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case,” Treasury Department spokeswoman Monica Crowley said.

For many lawmakers, plunging stock prices and an abrupt dropoff of consumer spending during a time of social distancing has crystallized the need for Congress to act quickly and boldly. The U.S. Federal Reserve has already used much of its toolbox to shore up the economy — bringing rates close to zero and announcing crisis-era lending programs — leaving policymakers to ease the extent of the damage with fiscal stimulus.

The unemployment scenario raised by Mnuchin would be a dramatic turn from February, when the U.S. jobless rate fell back to a half-century low of 3.5% as average hourly earnings climbed a steady 3% from a year earlier.