WASHINGTON: A US Federal Reserve official said that the worst was yet to come on the employment front aftera staggering 20.5 million jobs were slashed in April amid the COVID-19 pandemic.
“I mean the worst is yet to come on the job front, unfortunately. And that it really is going to be, you know, as these states start to reopen and as businesses start to reopen, obviously we need them to reopen safely,” Xinhua news agency quoted Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, as saying on ABC News on Sunday
“We may be in an environment of gradual relaxing and then having to clamp back down again around the country as the virus continues to spread,” he said. “To solve the economy, we must solve the virus. Let’s never lose sight of that fact.”
“What I’ve learned in the last few months, unfortunately, this is more likely to be a slow, more gradual recovery,” Kashkari said, throwing cold water on White House officials’ optimistic expectation about a very strong second half of 2020 and a roaring 2021.
“When we look around the world, there’s evidence that when countries relax their economic controls, the virus tends to flare back up again. And the longer this goes on, unfortunately, the more gradual the recovery is likely to be,” he said.
The Fed official noted that a “robust economy” would require a breakthrough in vaccines, widespread testing and therapies to give people confidence that it is safe to go back.
“I don’t know when we’re going to have that confidence,” he said.
Kashkari’s remarks came after Treasury Secretary Steven Mnuchin told Fox News earlier on Sunday that the unemployment numbers were probably “going to get worse before they get better”, acknowledging that the current jobless rate may have already hit 25 per cent.
The US economy is going to experience “a very, very bad second quarter”, but the nation is focusing on reopening the economy, so a rebound is expected in the third quarter, Mnuchin was quoted as saying.
Data released on May 8 by the Bureau of Labor Statistics (BLS) showed that US employers cut a staggering 20.5 million jobs in April, erasing a decade of job gains since the global financial crisis and pushing the unemployment rate to a record 14.7 per cent.
The record unemployment figure, however, might not capture the full scale of the COVID-19-induced job crisis, due to the survey’s timing and the traditional definition of unemployment, among other things.
About 7 million Americans filed for jobless claims since the BLS’s household survey reference period, in this case April 12 through April 18. Millions more might have been laid off or left a job and are not looking for a new one amid the pandemic, and thus might not be defined as unemployed.
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