Trump administration officials sought Sunday to lower short-term expectations on the cratering economy, predicting that unemployment will spike in the second quarter while promising a historic rebound in the latter half of 2020 — right before the presidential election.
“The reported numbers are probably going to get worse before they get better, but that is why we are focused on rebuilding this economy,” said Treasury Secretary Steven T. Mnuchin on “Fox News Sunday.” “We’ll have a better third quarter. We’ll have a better fourth quarter. And next year is going to be a great year.”
President Trump’s reelection may depend on it. After overseeing three years of stock-market highs and historically low unemployment, the jobless rate soared in April to 14.7%, the worst since the Great Depression, the result of the government-ordered economic shutdown in response to the novel coronavirus pandemic.
White House economic adviser Kevin Hassett warned Sunday that Americans should expect more pain for at least another month, with the jobless rate expected to top 20% in May or June as initial claims for unemployment insurance arrive at a clip of about three million per week.
“I think that just looking at the flow of initial claims, that it looks like we’re probably going to get close to 20% in the next report, depending on whether the virus has really abated by that point and the economies are really going again,” Mr. Hassett said on CNN’s “State of the Union.” “Then it could head down from there.”
Mr. Hassett said he expected an upturn in the economic picture by mid-summer, citing the Congressional Budget Office’s forecast of a strong second-half bounce-back.
“I would guess that the middle of summer is when we’re going to start to go into the transition phase, and then I expect that by the second half of the year, the CBO forecast is what we hope will be right, which will be that we have very strong growth in third and fourth quarters,” he said.
The speed of that recovery could depend on how quickly governors move to reopen their economies, a trajectory that so far has varied widely from state to state.
At one end of the spectrum is Georgia, where Republican Gov. Brian Kemp has moved aggressively to reopen businesses, even earning a rebuke last month from Mr. Trump, who said three weeks ago he “strongly” disagreed with the plan but would not interfere.
Mr. Kemp offered encouraging news Saturday, reporting that the state’s hospitalized coronavirus patients had dropped to 1,203, the lowest number since April 8, and that 897 of 1,945 ventilators were in use, another state low.
“We will win this fight together!” he tweeted.
At the opposite end is Illinois, where Democratic Gov. J.B. Pritzker unveiled last week a cautious five-phase reopening plan that keeps schools and non-essential businesses shuttered until doctors develop a vaccine or effective treatment, or the state reaches herd immunity.
The governor has been accused of moving the goalposts — he vowed initially to bend the curve on infections so that hospitals would not be overwhelmed, not wait until the coronavirus is defeated.
But he defended his plan on Sunday, arguing that the state is not yet out of danger.
“The truth is coronavirus is still out there. It hasn’t gone anywhere,” Mr. Pritzker said on CNN’s “State of the Union.” “So we all are going to have to change the way we do things until we’re able to eradicate it.”
With Mr. Trump making it clear that the states are in charge of their own reopenings, the governors have been caught between health-conscious residents who fear another outbreak, and economically struggling protesters who have lost jobs and risk losing their homes.
“It’s a risk no matter what we do,” said Ohio Gov. Mike DeWine on “Fox News Sunday.”
Dr. Tom Inglesby of the Johns Hopkins Bloomberg School of Public Health said Sunday that the U.S. has reached the fifth week of a “national plateau,” with hard-hit states like New York and New Jersey seeing a decline while other less-affected states watch their cases climb.
“The danger is that with increased social interaction in businesses or churches or in activities, going to restaurants, etc., that with increased social interaction, we will again see increased transmission and rising number of cases,” Dr. Inglesby said. “And in states where they’re already on the rise, that I could put a lot of pressure on their health care system. That could lead to new hot spots.”
Some experts warn that reopening too quickly could place both public health and the economy in danger by fueling a spike in cases that would force a second shutdown, but Mr. Mnuchin said that waiting too long to reinflate the economy also carried significant risks.
“If we do this carefully, working with the governors, I don’t think there’s a considerable risk,” Mr. Mnuchin said. “Matter of fact, I think there’s a considerable risk of not reopening. You’re talking about what would be permanent economic damage to the American public.”
Mr. Hassett described the coronavirus lockdown as “two giant forces colliding,” where the strongest U.S. economy in history was hit by the nation’s biggest economic lockdown.
“Remember that we basically stopped the greatest economy ever to save lives,” Mr. Hassett said. “I think we’re very glad. We’ve saved lots of lives, we’re very glad that we’ve done that. Now we’re gradually turning the economy back on.”
In Ohio, Mr. DeWine said he expected the state’s economy to be 90% reopened by the end of the week, noting that hospitalizations and new cases have both hit a plateau.
“The economy’s not going to open no matter what we do, whatever we order, unless people have confidence. And we’re trying to give them confidence,” Mr. DeWine said. “But at the same time we’re telling them, look, the virus is still out there, it’s still very, very dangerous. We have to keep the distancing.”
Like all governors, he urged residents to keep practicing the public-health habits learned during the pandemic.
“People should wear masks, wash your hands,” Mr. DeWine said. “I mean these are basic things that we have to do. We can’t let up.”