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

EconomyApr 26, 2020 10:10PM ET
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2/2 © Reuters. A man stands in front of a Modell's store that is closed, as retail sales suffer record drop during the outbreak of the coronavirus disease (COVID19) in New York 2/2

By Tim Ahmann

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

"It's a really grave situation," President Donald Trump's adviser, Kevin Hassett, told the ABC program "This Week."

"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, Hassett added.

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.

Hassett added that the second-quarter drop expected in the nation's GDP would be a "big number."

"I think the next couple of months are going to look terrible. You're going to see numbers as bad as anything we've ever seen before," Hassett said, referring to U.S. economic data.

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

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

"I'm sure that over the next three or four weeks, everybody's going to pull together and come up with a plan to give us the best chance possible for a V-shaped recovery," Hassett told ABC. "I ... don't think you get it if we don't have another round of really solid legislation."

A "V-shaped recovery" is one in which an economy bounces back sharply after a precipitous decline.

TENSIONS ON CAPITOL HILL

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

Lawmakers are now poised for a battle over federal assistance to state and local governments whose budgets have been shattered by a plunge in tax revenue even as they have had to take extraordinary measures during a pandemic that has caused a U.S. death toll approaching 55,000.

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

"If New York City is not (made) whole, it will drag down the entire region, and it will hold up the entire national economic restart," Mayor Bill de Blasio, a Democrat, said on the Fox program "Sunday Morning Futures."

Like de Blasio, many of the nation's governors - Democrats and Republicans alike - have pressed the Trump administration and Congress to come forward with a sizable relief package.

"We will have state and local (aid), and we will have it in a very significant way," House of Representatives Speaker Nancy Pelosi, 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 an even bigger number."

Trump has shown a willingness to support aid for cities and states, but some fellow Republicans - including Senate Majority Leader Mitch McConnell - have voiced wariness, citing a mounting federal debt load.

McConnell, in remarks that have drawn sharp rebukes from various governors as well as Democratic lawmakers, has suggested that states should declare bankruptcy instead.

Treasury Secretary Steven Mnuchin, asked whether Trump would support providing hundreds of billions of dollars to the states, said any further relief would have to receive support from both parties.

"This is a war. We'll win this war. If we need to spend more money, we will, and we'll only do it with bipartisan support," Mnuchin told "Fox News Sunday."

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

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Comments (27)
Proble Matic
Proble Matic Apr 27, 2020 3:50AM ET
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I agree with McConnell on this one, everyone file for bankruptcy. Let's see what happens.
Derek Klardie
Derek Klardie Apr 27, 2020 1:18AM ET
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Yes Mr Hassett, we need a V shape recovery because markets are never ever ever supposed to go down. Print, print, print.
Buzzy Jefferson
Buzzy Jefferson Apr 27, 2020 12:51AM ET
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Never forget the hubris, carelessness and selfishness of those who did this to the world. NEVER FORGET! China must pay, one way or another!
Eda Mucha
Eda Mucha Apr 27, 2020 12:51AM ET
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you are sick, Buzzy, go get help
Huzefa Mikail
Huzefa Mikail Apr 27, 2020 12:29AM ET
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Yet we will open green tomorrow!
Brian Kelly
Brian Kelly Apr 26, 2020 11:50PM ET
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can't wait to see Trump and his plutocratic allies in jail. he's ruined America at home with his daily spewing of hate, embraced our enemies and attacked our allies. forget the coronavirus, how long will it take for democracy to recover from Donald Trump?
Buzzy Jefferson
Buzzy Jefferson Apr 26, 2020 11:50PM ET
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@Briana Kelly. You know it's the democrats who are the party of racism and hate. Nice try to deflect, but no one's buying it. Without the racism industry, dems have ZERO to run on. They are morally bankrupt, and America is sick and tired of their lying cheating ways..
Bull Horns
Bull Horns Apr 26, 2020 11:50PM ET
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Buzzy Jefferson You're defending Trump of not lying and cheating... ha..haha...hahahahaha!
Chris Sundo
Chris Sundo Apr 26, 2020 11:10PM ET
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US GDP was around 27T in 2019. So far the stimulus has been around 3T. That's 24T to go, baby! Since markets by most standards were supported around February 202 0by nothing more than fake money and good words, and since the markets are now only a stone's throw of roughly 15% away from their average February high, it would be not far-fetched to say that now is roughly some kind of fair value for markets if we could project a smooth sailing in say 9 mos time, or January 2021 once there is no more upheaval by Trump through trade tariffs and we have gotten a hang of working while COVID wave 2 is raging. So I'm in favor if we were to do SIDEWAYS from here, in a narrow trading range until the other averages catch up and so we can hold the averages near here. LET'S TACKLE ONE STEP AT A TIME SINCE RE-OPENING IS A TRICKY BALANCING ACT DURING WHICH PEOPLE NEED TO PAY VERY CAREFUL ATTENTION if they want to avoid the bad lessons learned by Singapore which reopened before massive REinfections.
Gamer Turtle
GamerTurtle Apr 26, 2020 11:01PM ET
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when every central bank is printing, market won't be a V shape, it it'll be J shape
Chris Sundo
Chris Sundo Apr 26, 2020 10:49PM ET
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This coronavirus is mainly because of Trump's excessive management style of needing to tear down existing structures, push the envelope beyond the breaking point, tick off people to the max, annoy with his insensitivity and lie through his teeth and cause pain to everyone around the world. CV19 falls squarely into all the mayhem patterns that started with Trump showing up on the scene. Even the timing of the arrival in the USA of cv19 appears well known and timed for maximum benefit to the 1% in the know. The market went up parabolically for 6 months in this case as it usually does covertly before a critical event. Call it repo or what you want: Trump and cronies looted the public purse by driving the markets to excess, then shorting it from excessively high to excessively low and right back up to the 50 dma at which point they 'discover' that 'expert economists are making assessments' that were known when the Asian economies were starting to suffer in the beginning of January.
Chris Sundo
Chris Sundo Apr 26, 2020 10:49PM ET
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... such assessments being what is stated in the headline of this article. And where was this article in February? why wait until we reach the 50dma?
Randall Wagner
Randall Wagner Apr 26, 2020 10:49PM ET
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China is responsible not Trump. China needs to pay restitution until we reopen! Thank god for Trump.
franklin neversoy
franklin neversoy Apr 26, 2020 5:13PM ET
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Unemployment numbers Thursday be about the same I’m guessing 5.0 million
katya litski
katya litski Apr 26, 2020 5:07PM ET
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The Great Depression wouldn't have happened if Trump was president back then! go FED
Fred Smith
Fred Smith Apr 26, 2020 5:01PM ET
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25 million ppl were not fired. There are jobs now, but UI is 600 + states UI. People will be working by mid summer..uneducated article
Canis Lupus
Canis_lupus Apr 26, 2020 5:01PM ET
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Not all will. There won't be as many jobs available. Some businesses will go out of business, some will have to cut back because their normal amount of business will not just suddenly return. Because of social distancing and fear, businesses will not be able to service the same amount of customers, which means less revenue and needing less staff. It will eventually return, but if you think it all magically comes back by the Summer, I've got some land to sell you.
Big Guy
Big Guy Apr 26, 2020 5:01PM ET
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Taiwan is open... they never went on lockdown. Let that sink in.
kamagong bahay
kamagong bahay Apr 26, 2020 5:01PM ET
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Big Guy because taiwanese were as one in doing their part (wearing mask, etc), never believed WHO and they dont have a donnie.
Buzzy Jefferson
Buzzy Jefferson Apr 26, 2020 5:01PM ET
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Big Guy Taiwan is a very good example of rational leadership during this Wuhan Chinese pandemic.
Gian Carlo Orlandi
Gian Carlo Orlandi Apr 26, 2020 5:01PM ET
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Remember December 2019? It will at least 5 years to get back to that numbers. Unemployment will remain high as many businesses like restaurants, bars, or tourism related will work at 20/25% capacity. Social distancing equals no traveling around the world for leisure. This recovery is a giant fake so be carefull
Canis Lupus
Canis_lupus Apr 26, 2020 3:23PM ET
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I think Trump is playing this all wrong. His economy wasn't as great as you think. It appeared to be based on an earnings hoax based on buybacks, not growth, which was stagnant at best. The only thing keeping the economy alive was the consumer, and they were strong because jobs were plentiful. But' that was coming to end and eventually companies would have to start cutting because they didn't really have the growth to support these extremes. So, Trump's economy was a time bomb. This was the perfect excuse to blame the wreckage on something other than himself. He would be better off to not try and rush back to reopen, pay more fiscal stimulus to people and blame mother nature for ruining the economy. This was his out.. He should have change the narrative from a booming economy to how much he cares for the American people. Capitalism is under attack and this was his chance to change to a more humane story rather than a money driven one. Now, he might have jeopardized his re-election.
Joe Ruscigno
Joe Ruscigno Apr 26, 2020 3:01PM ET
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It’s higher than that already.
Jason Zou
Jason Zou Apr 26, 2020 2:58PM ET
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What are your advices? I do not see any, or is it sycophancy?
Chris Sundo
Chris Sundo Apr 26, 2020 2:58PM ET
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practice yoga multi times a week and drink home-made juices and eat home-made Ice cream as a sweet treat
Buzzy Jefferson
Buzzy Jefferson Apr 26, 2020 2:58PM ET
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@"Jason" Zou - go back and finish grade school.
Chris Sundo
Chris Sundo Apr 26, 2020 2:47PM ET
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V-shaped recovery to what? to Overbought?__Whether we short from here or from higher up THE END RESULT IS GONNA BE THE SAME bottom!!__Pandemics won't go out of style unfortunately; and Communists and the Axis of Ev'il countries have many labs; Remember that the NoKo man killed his own bro with a lab-grown substance, Russia eliminated a former spy in the U.K. and Syria attacked its own citizens with poison gas. __The better solution is NOT TO BURDEN FUTURE GENERATIONS with today's quick gratification money but to HARDEN THE HEALTH OF USA population using the tools I recommended to Trump last year and to the Dems before the last election. Those tools and methods would be good for the population's health, longevity and competitiveness, save union costs and take back jobs from China, but they would put a dent into the doctors and big pharma's profits while saving Medicare a steep bundle.
Noelle Milton Vega
NYCeyes Apr 26, 2020 2:45PM ET
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16% jobless rate coming? Fake news... We've been there for *at least* 12 years. Again, fake news.
lewis palmer
lewis palmer Apr 26, 2020 2:34PM ET
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there's gold in all that printing
Hans Meier
Hans Meier Apr 26, 2020 2:19PM ET
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V-shape revovery?
Midway Eholdings
Midway Eholdings Apr 26, 2020 2:15PM ET
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Bear trap
Jay West
Jay West Apr 26, 2020 2:15PM ET
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What do you mean by this?
Jay West
Jay West Apr 26, 2020 2:15PM ET
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Should the market rise from here because short sellers keep selling in hopes the market will continue to go down, but in fact it is in a reversal to the bullish side?
Joe Ruscigno
Joe Ruscigno Apr 26, 2020 2:15PM ET
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Jay West it means you’re gonna get buried...
Arek Demirkiran
Arek Demirkiran Apr 26, 2020 2:15PM ET
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Economy has NOT recovered and it will take months and most likely a year. This V shaped recovery can not be sustained for long. This is a bear trap. But I don’t expect that we will test the March low but this will go down about half way there then very slowly start to climb back up. I expect the markets will make new highs later in the year but short term this is going down.
Kaveh Sun
Kaveh Sun Apr 26, 2020 2:01PM ET
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Shut downs delay the spread of infection and reduce the burden on the health care system, but they are not designed to eradicate the virus. We need to test all.
Poor Standards
PoorStandards Apr 26, 2020 1:48PM ET
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Opening up too early will only make the situation worse.  Maybe we should pay as much attention to our disease experts as we do to our plumbers when we don't want to end up knee deep in ***
Kaveh Sun
Kaveh Sun Apr 26, 2020 1:48PM ET
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Shut down delay the spread of infection and reduce the burden on the health care system, but they are not designed to eradicate the virus. Next year likely we all will be exposed to the virus. Test all and is0late the carriers unless u want natual selection. Lets the weaks drop out.
franklin neversoy
franklin neversoy Apr 26, 2020 1:48PM ET
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Excellent comment us pheasants have no patience for anything virus or not
Nick Goldmark
Nick Goldmark Apr 26, 2020 1:48PM ET
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What are your top shorts?
Chris Sundo
Chris Sundo Apr 26, 2020 1:48PM ET
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3x leveraged ETFs
Kilo Byte
Kilo Byte Apr 26, 2020 1:37PM ET
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The Drumpf effect.
Kaveh Sun
Kaveh Sun Apr 26, 2020 12:00PM ET
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If the econ is closed for a long time, 1929 crash is a walk in the park. We need to test all is0late the c@rriers and open up the country now.
Nick Gee
Nick Gee Apr 26, 2020 12:00PM ET
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and do you suppose we do that? lol You got 325,000,000 test kits on your garage?
Kaveh Sun
Kaveh Sun Apr 26, 2020 12:00PM ET
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Nick Gee we depens on china for raw material. It is time we should mfg ourselves.
Christian Busse
Christian Busse Apr 26, 2020 11:57AM ET
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Help the economy with inflation?
 
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