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2020-04-27

The U.S. economy is facing historic shock, with an unemployment rate of 16 percent, Trump advisor says.

Image:-unemployment rate of 16 percent

The U.S. economy's shuttering due to the coronavirus pandemic is a shock of historic proportions that will likely push the national unemployment rate to 16 percent or higher this month and require more stimulus to ensure a strong rebound, a Sunday White House economic adviser said.

"It is a really serious situation," adviser to President Donald Trump, Kevin Hassett, told the "This Week" ABC program. "This is the biggest negative shock our economy has ever seen, I think. We will look at a rate of unemployment that approaches the rates we saw during the 1930s' Great Depression, "Hassett added.

Lockdowns across the U.S. to curtail the spread of the novel coronavirus have hammered the economy, shutting out businesses and sending skyrocketing unemployment.

Since mid-March, a record 26.5 million Americans have filed for jobless benefits, and all have cratered down on retail sales, homebuilding and consumer confidence.

The nonpartisan Congressional Budget Office predicts that in the second quarter, U.S. gross domestic product will contract at almost a 40 percent annual rate, with unemployment cresting 16 percent in the third quarter. But even next year, the CBO still sees the jobless rate above 10 per cent on average.

The U.S. unemployment rate had floated at a 50-year low of 3.5 percent before the pandemic struck.

"I think the unemployment rate will probably jump to a level around 16 percent or even higher in the next job report," Hassett told reporters at the White House on May 8, providing April employment statistics.

Hassett added that the expected 2nd-quarter drop in the nation's GDP would be a "big number." "I think the next few months will look awful. You will see numbers as bad as anything that we've ever seen before, "said Hassett, referring to U.S. economic data.

"We'll need to put together really big thoughtful policies to make it so people are optimistic again," Hassett added.

Trump's advisers want to hone a list of five or six ideas to present to Congress, Hassett said, to help clear the economic carnage.

"I'm sure everyone's going to pull together over the next three or four weeks and come up with a plan to give us the best possible chance for a V-shaped recovery," Hassett told ABC. "I am ... If we don't have another round of really solid legislation, don't think you get it. "A" V-shaped recovery "is one in which the economy bounces back sharply after a precipitous decline.

TENSIONS ON CAPITOL HILL

In a bipartisan support show for laid-off workers and an economy in free fall, the U.S. Congress has already approved $3 trillion in coronavirus relief.

Lawmakers are now in the midst of a battle over federal assistance to state and local governments whose budgets have been shattered by a drop in tax revenue, even as they have had to take extraordinary action during a pandemic that has caused a death toll of nearly 55,000 in the United States.

New York City needs federal aid of $7.4 billion to offset the coronavirus' economic losses, its mayor said on Sunday.

"If New York City is not (made) whole, it will drag the whole region down and hold the entire national economic restart," said Mayor Bill de Blasio, a Democrat, on the "Sunday Morning Futures" Fox programme. Like de Blasio, many of the nation's governors, Democrats and Republicans alike, urged the Trump administration and Congress to come forward with a substantial relief package

"We will have state and local (aid) and we will have it in a very significant way," Nancy Pelosi, Speaker of the House of Representatives, the top Democrat in Congress, said on CNN's "State of the Union." "The governors are impatient," Pelosi added. "Their impatience will help us get even greater numbers." Trump has shown a willingness to support urban and state aid, but some fellow Republicans – including Senate Majority Leader Mitch McConnell – have voiced warmth, citing a rising federal debt burden.

In remarks which have drawn sharp rebukes from various governors as well as Democratic legislators, McConnell suggested that states should instead declare bankruptcy.

Treasury Secretary Steven Mnuchin, who asked if Trump would support providing the states with hundreds of billions of dollars, said any further relief would have to be supported by both parties.

"It's a war. We are going to win this war. If we're going to need to spend more money, and we're only going to do it with bipartisan support, "Mnuchin told" Fox News Sunday