Hassett says unemployment rate could still be in double digits by election

Marco Green
May 25, 2020

Bash asked if "it's possible that unemployment will be in double digits in November".

Sunday on CNN's "State of the Union," White House senior economic adviser Kevin Hassett warmed the unemployment rate would soon be "north of 20%".

Hassett is concerned that national unemployment could balloon to over 20% in May and June.

The insured unemployment rate, or the number of people now receiving unemployment insurance as a share of the total eligible labour market, rose to 17.2 per cent in the week ended May 9, according to the latest Labor Department report.

"This was the biggest negative shock ever, but we also had the biggest policy response ever", Hassett said.

Kevin Hassett predicted that U.S. economic growth will "skyrocket" in the third quarter but could fall short of a full recovery from the coronavirus pandemic.

Asked whether he thinks those levels could continue through the general election with President Trump on the ballot, Hassett said, "Yes, I do".

His view was echoed by Rosengren, now the longest-serving Fed policy maker, who said he expects the unemployment rate to remain above 10% through 2020. "I have two very close friends-both conservatives, both Harvard professor-and one of them thinks it's going to take many many years, and the other one thinks it's going to happen virtually overnight".

"The only thing we're going to be debating as economists" is how quickly output will return to where it was before the pandemic, Hassett said.

"Unemployment will be something that moves back slower. Our capital stock hasn't been destroyed, our human capital stock is ready to get back to work, and so there are lots of reasons to believe that we can get going way faster than we have in previous crises", Hassett said. "If there were a vaccine in July, then I would be way more optimistic about it". However, it isn't clear what will be included in the coming stimulus package, as top GOP members in Congress disagree with Democrats on provisions such as expanded unemployment insurance, vote-by-mail, or how much should be sent to state and local governments. Hassett cautioned that there was a possibility of double-digit unemployment in November.

-With assistance from Christopher Condon.

Other reports by Click Lancashire

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