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White House officials are warning Americans to brace for unemployment levels that will rival the Great Depression this summer.
A senior economic advisor to President Donald Trump, Kevin Hassett, issued the warning on Tuesday. He said by June, the jobless rate in the US could spike to between 16 to 20 percent.
The current levels are 4.4 percent. Such a spike would be a startling difference. It would mark the highest unemployment rate since the 1930s.
The US Bureau of Labor Statistics estimates that unemployment spiked at 25 percent in 1933.
Economic numbers “will be as bad as anything we’ve ever seen” between May and July, said Hassett to CNN’s Poppy Harlow.
Huge swathes of the American economy were crushed by the pandemic in March. This resulted in normally crowded areas, such as sports arenas, theme parks, restaurants and movie theaters shutting down.
Even if officials relax social distancing restrictions, it’s not clear if consumers will return to those places the same way they did before.
More than 25 million unemployment claims have been filed since March 14. With the economy losing more than 700,000 jobs, the unemployment rate rose drastically from a 50-year low of 3.5 percent.
Related: Millions File for Unemployment… Is There Hope?
Economists estimate that the GDP contracted during the first quarter by an annualized rate of 4 percent. This would mark the worst quarter for the economy since the Great Recession (if confirmed by the government).
Hassett says that the biggest pain from this will be felt during the second quarter. He says that the US GDP could collapse by an unprecedented annual rate of 40 percent.
This matches some Wall Street investment bank predictions.
“I’m not saying we’re going to have a Great Depression, but I am saying prepare yourself,” said Hassett. “GDP tomorrow will probably be a negative number and that will be the tip of the iceberg of a few months of negative news that’s unlike anything you’ve ever seen.”
However, other Trump administration officials offer a more positive outlook. On Sunday, Treasury Secretary Steven Mnuchin said that the US economy is expected to rebound over the summer.
“What I do think is, as we open up the economy in May and June, you will begin to see the economy bounce back in July, August, September. My expectation is that you’ll see an increasing rate of growth in those three months.”
So far, some Americans have been able to continue their employment through essential work. Others, thanks to remote computer access, have been able to work online.
Related: Can You Get Unemployment as a Freelancer or Self-Employed Worker?
