Explaining America's worst unemployment scenario, the former chair of the Council of Economic Advisers told CBS' "Face the Nation" that to witness the unemployment rates like the ones America is likely to see, which he predicted will go as high as 20 percent in June, Hassett said the country will need to go back to the Great Depression. "I'm looking for rates north of 20, sadly," he said.
America's economic condition will not be the same as it was during the Great Depression when employment reached 25 percent, he said, adding that the country has a better understanding of the cause of this economic slowdown. Hassett hopes that the government doesn't make the same policy errors it made during the Great Depression and ended up extending the economic crisis.
He expects jobs to trough in May or June, with the unemployment rate continuing to rise amid Americans filing unemployment claims. According to Hassett, the country is burning up initial claims for unemployment insurance at the moment at an alarming rate of about 3 million a week, and this is likely to be the case through the rest of the month. This is where the additional unemployment is coming from, he said.
According to USA Today's April jobs report, unemployment rates reached 14.7 percent, with 20.5 million job losses in the month as coronavirus continues to tighten its grip on the United States. These are record-high numbers as the nation experienced the impact coronavirus had on its economy. To make things worse, social distancing restrictions left businesses with no choice but to close down, triggering employee layoffs and furloughs.
Paying no heed to these losses, Donald Trump's key economic advisers are hinting at the economy's recovery as some states start lifting the stay at home orders and reopening the economy. Keeping in line with that, the president has shown eagerness to reopen businesses, ignoring experts advises that attempting to return to normal too early could increase the spread of the virus.
Hassett attributes the economy rebound to the relief legislation passed by Congress and the Federal Reserve's actions. By shelling out a lot of money, the government has been able to buy some time, which is investing in developing and improving treatments, learning more about social distancing, and more.
Treasury Secretary Steven Mnuchin told Fox News Sunday that the numbers are highly likely to get worse before they start seeing any sort of improvement and that is exactly why they are bent on rebuilding the economy. "We’ll have a better third quarter," Mnuchin said, adding that the fourth quarter, as well as 2021, is going to be a great year for the United States.