Monday 25 May 2020

U.S. Unemployment Will Top 20% In June, White House Adviser Says

Senior White House economic adviser Kevin Hassett on Sunday predicted the unemployment rate in the U.S. will soar above 20% in June, despite the fact that all 50 states have begun to move toward reopening their economies.
“It’s going to be quite a bit higher,” Hassett said on CNN. “There were some technical things they kind of messed up, but it could be, if they fix the numbers, that you’ll end up with a number north of 20%.”
But he offered a bit of good news, too.
“My expectation is that, since there’s still initial claims for unemployment insurance in May, the unemployment rate will be higher in June. After that, it should start to trend down. So, I think we’re very, very close to an inflection point in terms of business activity and probably about a month away in terms of employment,” he said.
Some 43 states are moving toward their highest unemployment rates in history, according to the Bureau of Labor Statistics. The unemployment in Louisiana is already worse than it was in 2005, when unemployment doubled after Hurricane Katrina, the bureau said. Labor Department figures also showed that unemployment rates in Hawaii, Michigan, and Nevada have already exceeded 20%.
Young people are the hardest hit. The unemployment rate for teenagers soared in April to 32%, the highest since 1948, and summer jobs may not materialize as in years past.
CNN’s Dana Bash, host of “State of the Union,” asked Hassett if he thinks “it’s possible that unemployment will be in double digits in November.”
“Yes, I do. But I think that all the signs of economic recovery are going to be raging everywhere,” he said.
Then Hassett delivered some more bad news.
“Of course, you could still not be back to full employment by September or October,” Hassett said. “If there were a vaccine in July, then I’d be way more optimistic about it.”
“This was the biggest negative shock ever, but we also had the biggest policy response ever,” Hassett said.
The unemployment rate rose to 14.7% last month amid the COVID-19 pandemic. Nearly 40 million Americans have filed for unemployment benefits since the virus landed on American shores.
Hassett also said the Trump administration is mulling another round of direct payments to Americans in the next coronavirus-related legislative package. He called the stimulus checks of up to $1,200 for millions of Americans an “enormously successful part” of federal legislation that Congress passed in recent weeks in response to the coronavirus pandemic.
“I think depending on the state of the economy it’s something that I guess we’d consider,” he said.
But he added that there are other options.
“Right now it looks like the economy’s picking up at a very rapid rate, in which case we could potentially move on to other things that the president has mentioned like the payroll tax cut and potentially even [a] capital gains holiday,” Hassett said.

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