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U.S. economy faces historic shock, with 16% joblessness possible

“It’s a really grave situation, this is the biggest negative shock that our economy, I think, has ever seen. We’re going to be looking at an unemployment rate that approaches rates that we saw during the Great Depression” of the 1930s, President Donald Trump’s adviser, Kevin Hassett said.

Lockdowns across the United States to curtail the spread of the novel coronavirus have hammered the economy, shuttering businesses and sending unemployment skyrocketing.

A record 26.5 million Americans have filed for jobless benefits since mid-March, and retail sales, homebuilding and consumer confidence have all cratered.

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

Before the pandemic struck, the U.S. jobless rate had been hovering at a 50-year low of 3.5%.

“I think the unemployment rate is going to jump to a level probably around 16 percent or even higher in the next jobs report,” due on May 8, providing April employment statistics, Hassett told reporters at the White House.

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