The US unemployment rate may still be in double digits when President Donald Trump is running again in November, said a White House economic adviser and a regional Federal Reserve president.
While unemployment data is a lagging indicator, business activity is near the “turning point” towards recovery, White House aide Kevin Hassett told CNN’s “State of the Union” on Sunday.
The job market, as indicated by the unemployment rate, “may be about a month away” from that point, Hassett said. The unemployment rate tends to peak above 20%, he said.
Eric Rosengren, president of the Boston Fed, said the unemployment rate will remain more than 10% until 2020, risking “severe results” in the labor market over time.
The insured unemployment rate, or the number of people currently receiving unemployment insurance as part of the total eligible labor market, rose to 17.2% in the week ended May 9, according to the latest Department of Labor report.
“We will see more bad data,” Hassett said. If the disturbance that damaged data last week has been fixed, U.S. could “end up with a north rate of 20% in May.”
People’s fear of contracting the virus and the absence of a vaccine is likely to weigh on the economy until the fall, Hassett said, although he expressed confidence that the virus would “skyrocket” again in the third quarter after recording record losses in the second quarter. quarter, citing estimates of the Congressional Budget Office.
Asked if he saw the unemployment rate in double digits in November, Hassett said: “Yes, I know.”
His view was echoed by Rosengren, who is currently the longest-running Fed policy maker, who said he expected the unemployment rate to remain above 10% until 2020.
“Unfortunately I think it is likely to be double digit unemployment by the end of this year,” Rosengren said on CBS’s “Face the Nation.”
“Full employment – returning to the low unemployment we saw at the end of February – might take vaccines or other innovations that make it far more risky to leave,” Rosengren said.
Hassett said that for months “all signs of economic recovery will rage everywhere,” consistent with his view of a strong rebound in the quarter that began in July.
“The only thing we will debate as economists” is how quickly output will return to where it was before the pandemic, Hassett said.
“Unemployment will be something that moves slower,” Hassett said. “It could be better than that, but you will start at the numbers in your 20s and work down. So of course you cannot return to full employment in September or October. If there is a vaccine in July, I will be much more optimistic . “
With Congress debating a possible fourth economic stimulus bill, Hassett accused Democrats of supporting “unreasonable” requests for assistance to local and state governments who said he was looking for “radically more money” than estimated budget shortages related to the virus crisis.
“It’s a lot of money for the state,” and “I don’t know” whether the needs analysis will support the Democrat-led forecast, he said.
However, Rosengren said that a long stretch of double-digit unemployment risks “far worse outcomes on the labor market over time” and that “additional fiscal policy” will be needed.
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