Coronavirus: Steven Mnuchin warns US unemployment rate could hit 20 percent if government fails to intervene
A low unemployment rate was something that made President Donald Trump confident about his re-election bid this year. But with the blow that the coronavirus outbreak has dealt, the rosy picture is turning grey in no time. And the situation is so grave now that Treasury Secretary Steven Mnuchin, who till recently was assuring the Americans against a recession, has reportedly warned that the country’s unemployment rate could shoot up to 20 percent as the virus has pushed the economy into a recession.
On Tuesday, March 17, it was revealed that global recession has already set in because of the spread of COVID-19 as major companies have started cutting down on their workforces and a fifth of the American workers have already lost wages because of the crisis.
Mnuchin made his pessimistic stance known on March 17 when he spoke on the matter with Republican senators. He said the unemployment rate in the country could touch 20 percent if there is no intervention on the government’s part because of coronavirus’ impact, states a report in Bloomberg citing people familiar with the matter. He also proposed an economic stimulus of $1 trillion or more. Mnuchin, who took over in 2017, even cautioned that the economic fallout from the coronavirus outbreak could be worse than the 2008 financial crisis, the report added.
The treasury secretary then advised that the lawmakers needed to provide swift financial aid to wage workers and small- and medium-sized businesses to curb the rising unemployment rate.
Treasury Department spokeswoman Monica Crowley told Bloomberg: “During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case.”
It was just last Sunday, March 15, that Mnuchin said he was confident that the US economy will overcome the slowdown caused by the coronavirus outbreak and he did not expect a recession.
Recession likely to have started already, say economists
Meanwhile, economists for Goldman Sachs and Morgan Stanley said a global recession is likely to have started already and now the only question is how big the pullback will be and how long will it last.
“We expect the recession to be front-loaded, with a recovery in [the second half of the year],” Daily Mail cited Goldman Sachs' chief economist saying in a note to clients.
A new Marist poll conducted for NPR/PBS News earlier this week showed 18 percent of adults in the US saying they have either lost their jobs or their working hours have been reduced because of the pandemic that has claimed over 100 lives in the country so far.
President Trump, who is finding himself increasingly challenged with each passing day, also acknowledged that the US was going into recession and promised big plans to tackle the economic hardships caused by the deadly disease’s outbreak. The embattled president wants his government to send checks to common Americans over the next two weeks to support them as the economy continues to slide, Mnuchin added on March 17.