White House officials want Americans to get ready for things to get worse on the economic front before they start improving. White House economic adviser Kevin Hassett said the unemployment rate could “climb up toward 20 percent by next month.” Hassett, who is the chairman of the Council of Economic Advisers, said on CBS’ Face the Nation that he was “looking for rates north of 20 percent” before the job market stabilizes. The Labor Department reported on Friday that the unemployment rate soared to 14.7 percent in April. Speaking on CNN’s State of the Union, Hassett predicted that it wouldn’t be until the “middle of the summer” that “we are going to start to go into the transition phase” before there is “very strong growth in the third and fourth quarters.”
Treasury Secretary Steven Mnuchin also agreed that “the reported numbers are probably going to get worse before they get better” but sounded a bit of an optimistic tone on Fox News Sunday by adding that “we’ll have a better third quarter, we’ll have a better fourth quarter, and next year is going to be a great year.”
Although Hassett said that “you have to really go back to the Great Depression to see” similar numbers, there is a glass-half-full way of looking at the dire numbers. Both Hassett and Mnuchin emphasized that as opposed to the Great Depression, when unemployment rose to 25 percent, this time the government is clear on what is causing the current crisis and it has nothing to do with economic fundamentals. “This is no fault of American business, this is no fault of American workers. This is a result of a virus,” Mnuchin said.
White House economic adviser Larry Kudlow also said on ABC’s This Week that “there’s a glimmer of hope” inside the numbers. “About 80 percent of it was furloughs and temporary layoffs. That, by the way, doesn’t assure that you will go back to a job, but it suggests strongly that the cord between the worker and the business is still intact.”
When he was asked about the risks of reopening the economy too soon, Mnuchin said he was more worried about the opposite scenario. “If we do this carefully, working with the governors, I don’t think there’s a considerable risk,” he said. “Matter of fact, I think there’s a considerable risk of not reopening. You’re talking about what would be permanent economic damage to the American public, and we’re going to reopen in a very thoughtful way that gets people back to work safely that keeps people social distanced.”
Some, however, were not ready to jump on the optimism bandwagon and warned it could take far longer for the job market to recover. Among the less optimistic voices was Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis. “If this goes on for a long period of time, I think it’s going to go on in some phase for a year or two,” he said on ABC’s This Week. Kashkari warned that “the worst is yet to come on the job front, unfortunately.”
Amid the concern about the future economic news, Mnuchin and Kudlow said there are ongoing discussions with lawmakers about what should be included in another round of coronavirus relief legislation. At the same time, though, some senior Trump administration officials are growing increasingly concerned about the effect of stimulus efforts on the national debt, reports the Washington Post. “A lot of people in the administration are concerned Republicans have completely surrendered the argument on spending, and they want to address it,” said Jason Pye, vice president of legislative affairs at FreedomWorks. “And it’s an entirely valid concern.”