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US Treasury warns of 20% unemployment rate over coronavirus

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Steven Mnuchin speaks beside President Trump during a Coronavirus Task Force news conference on March 17. Photographer: Kevin Dietsch/UPI/Bloomberg

The US Treasury secretary has warned that the US unemployment rate could spike to 20 percent due to the escalating coronavirus pandemic.

Steven Mnuchin told Republican senators that the jobless rate could reach 20 percent -- more than double its peak during the 2008 economic downturn -- if they failed to act on a proposed coronavirus rescue package and there was lasting economic damage.

He urged Republican senators to act on economic stimulus program, totaling $1 trillion to avert that kind of worst case scenario.

Mnuchin met with senators to persuade them to pass the stimulus package that would send cash to Americans and backstop airlines and other companies.

President Donald Trump has downplayed Mnuchin’s warning, calling it "an absolute total worst-case scenario."

"We're nowhere near it," the president, who is seeking re-election in November, told reporters at the White House.

Mnuchin's warning came as the White House and Capitol Hill are scrambling to confront the increasingly threat of the coronavirus pandemic to both the public health and economic fronts.

As more US businesses are forced to close, the Trump administration is presses for approval by Congress of a $1.3 trillion emergency spending package to ease the economic pain from the coronavirus outbreak.

A 20% unemployment rate would be the highest in the US since the Great Depression, during which the jobless rate peaked at 24.9% in 1933. A 20% rate would leave more than 32 million Americans out of a job.

As the US economy is shutting down over the coronavirus, analysts say repercussions of the pandemic could harm various sectors amid rising fears over the fast-moving virus.

“It’s really hard to predict how it’s going to play out,” said Wayne Outten, the founder and chair of Outten & Golden, an employment law firm in New York, of the coronavirus fallout. “The ripple effect can be dramatic in so many different industries.”

Investors and analysts have warned that the economic fallout could threaten Trump’s re-election bid in November, Reuters said.

“President Trump’s reelection likely hinges on the economy — a medical and/or economic shock from coronavirus (COVID-19) are arguably the biggest threats to Trump’s re-election,” American financial services company Raymond James said.

“If we go into recession, history speaks for itself. No sitting president has ever been re-elected in a recession, “said Peter Cardillo, chief market economist for Spartan Capital Securities.

The White House is facing harsh criticism that it initially bungled its response to the coronavirus outbreak and under-funded the containment efforts.

The US confirmed at least 8,760 coronavirus cases and 149 deaths as of early Thursday morning.


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