US economy faces historic shock due to pandemic

WASHINGTON (Reuters) — The shuttering of the US economy due to the coronavirus pandemic is a shock of historic proportions that will likely push the national unemployment rate to 16 percent or higher this month and require more stimulus to ensure a strong rebound, a White House economic adviser said on Sunday.

“It’s a really grave situation,”

President Donald Trump’s adviser, Kevin Hassett, told the ABC program “This Week.”

“This is the biggest negative shock that our economy, I think, has ever seen. We’re going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression” of the 1930s, Hassett added.

Lockdowns across the United States to curtail the spread of the novel coronavirus have hammered the economy, shuttering businesses and sending unemployment skyrocketing.

A record 26.5 million Americans have filed for jobless benefits since mid-March, and retail sales, homebuilding and consumer confidence have all cratered.

The nonpartisan Congressional Budget Office predicts US gross domestic product will contract at nearly a 40 percent annual rate in the second quarter, with unemployment cresting at 16 percent in the third quarter. But even next year, the CBO sees the jobless rate still averaging above 10 percent.

Before the pandemic struck, the US jobless rate had been hovering at a 50-year low of 3.5 percent.

“I think the unemployment rate is going to jump to a level probably around 16 percent or even higher in the next jobs report,” due on May 8, providing April employment statistics, Hassett told reporters at the White House.