Treasury Secretary Steven Mnuchin has reportedly warned that the US could see an unemployment rate of 20 per cent
Treasury Secretary Steven Mnuchin has reportedly warned that the US could see an unemployment rate of 20 per cent as the coronavirus plunges the economy into a recession.
On Tuesday, it was revealed that a global recession has already begun due to the spread of COVID-19 as major companies begin laying off employees worldwide and a fifth of US workers say that they have already lost wages due to the crisis.
Mnuchin reportedly made his remarks about the economy during a meeting with senators on Tuesday.
According to Bloomberg News, Mnuchin said he believes the economic fallout from the coronavirus is potentially worse than the 2008 financial crisis.
He then said that the virus could drive up the unemployment rate if lawmakers don’t provide a swift financial response to wage workers and small- and medium-sized businesses.
Treasury Department spokeswoman told Bloomberg that during the meeting with Senate Republicans, ‘Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case’.
Regardless, economists for Goldman Sachs and Morgan Stanley say that a global recession has likely already begun, with the only question remaining how severe the pullback will be, and how long it will last.
A statue of George Washington is seen by the New York Stock Exchange on Monday. Economists for Goldman Sachs and Morgan Stanley say that a recession has already begun
A nearly empty Times Square due to the coronavirus pandemic is seen on Tuesday
Chairs are stacked at temporarily closed Cipriani Dolci at Grand Central in New York City as the coronavirus continues to spread across the United States
‘We expect the recession to be front-loaded, with a recovery in [the second half of the year],’ said Goldman Sachs’ chief economist in a note to clients.
‘This assumes that infections will slow significantly by the end of April as the lockdowns and other mitigation measures bear fruit.’
Meanwhile, in a new Marist poll conducted for NPR/PBS News earlier this week, 18 per cent of US adults said that they had already lost their job or had their hours reduced due to the pandemic.
At the national level, President Donald Trump promised he’s ‘going big’ with plans to blunt the economic pain caused by the coronavirus outbreak.
Trump wants the government to send checks to Americans in the next two weeks to help support them while chunks of the economy come closer to shutting down, Mnuchin said Tuesday.
Gains for stocks accelerated temporarily as Trump and Mnuchin spoke at a briefing, but neither gave details about how big the stimulus could be.
Mnuchin is pitching Senate Republicans on a roughly $850billion stimulus plan to help the economy, including relief for small businesses and the airline industry.
Across the country, indications were stark that the pandemic, and the measures being taken to contain it, are having a severe effect on workers across a range of industries.
Travel has ground to a standstill, with business and personal trips being put on hold, and increasingly severe international travel bans.
American hotel and travel industry executives from companies such as Marriott and Hilton met with Trump on Tuesday to discuss a potential $250billion aid package, as thousands of hotel workers began furloughs due to the fast-spreading coronavirus.
‘Millions of people could get laid off in the next few days, not weeks,’ said American Hotel and Lodging Association CEO Chip Rogers.
Rogers echoed the same concerns as Mnuchin and said the economic impact of the pandemic on the hotel industry was already bigger than ‘September 11th and the 2008 recession combined’.
Manager of the popular Bronx hangout spot Bronx Alehouse tapes a sign saying that they will be closing starting at 8pm on Monday, March 16
Taped off seating areas in a McDonald’s restaurant in Brooklyn on Tuesday. New York is trying to mitigate the spread of the coronavirus by closing schools, restaurants and bars
A woman wearing a face mask walks in front of a Dunkin Donuts store in Bushwick, Brooklyn on Tuesday. The future of their workforce is uncertain due to coronavirus.
This Dunkin in Brooklyn remains open for carryout. Employees of the chain do not receive paid leave and fear being laid off
‘Thirty-three thousand small business hotels across the country are facing the difficult decision right now whether to close their doors and lay off millions of people over the next few days,’ Rogers said on the call with reporters after the Trump meeting.
The requested package would consist of $150billion in direct aid for the hotel sector and $100billion for related travel companies, including convention businesses, industry executives said on a call after the meeting with Trump, who made his fortune in real estate and hotels.
Separately, the airline industry has asked for $58billion in assistance for both passenger and cargo carriers, plus $10billion for airports.
The hotel industry said it was expecting to lose $1.4billion in revenue every week on account of the virus, according to statements from the American Hotel and Lodging Association and the US Travel Association, which also forecasts a 30 per cent drop in hotel occupancy over a year.
The sudden cratering of demand would cause the loss of 4.6 million jobs, the statements added.
The groups said they asked the White House to take ‘immediate action’ including a stabilization fund to keep people employed and access to liquidity for hotel businesses in the form of low interest loans.
They also asked for modifications to loan programs to help keep small hotel owners afloat and direct grants.
Roger Dow, chief executive of the US Travel Association, said ‘it will take at least $100billion to cover wages for two quarters, and then you take the rest of the industry, we’re talking $150billion’.
The world’s biggest hotel operator, Marriott International, responded on Tuesday by launching furloughs what it expects will be tens of thousands of employees.
Marriott will not pay salaries to its furloughed employees at some of its managed properties which it started shutting down last week, according to the report.
Ieisha Dede, left, and Cali Malatek put up a take out sign outside a Denny’s restaurant on in Spring, Texas. Houston area bars and restaurants have been ordered to follow new restrictions
Bartender Michelle Radziunas waits for customers at Maloney’s Pub in Meriden, Connecticut, hours before the state joined others in closing all bars and restaurants
The company is also trimming staff through furloughs at properties that are still operating, the Journal said.
Marriott had about 174,000 employees at the end of 2019.
The staff reductions will include everyone from general managers to housekeepers, as layoffs or furloughs at the corporate level are still under discussion, according to the report.
Meanwhile, a spate of orders closing all restaurants and bars for dine in service in New York, California, New Jersey, Illinois and many other states has devastated those who work in the industry.
Across the country, there were 11,674,000 people working in restaurants and bars as of February, according to federal data.
Senator Rob Portman, and Ohio Republican, said on Tuesday that he received new data on Ohio’s unemployment claims showing 45,000 claims this week compared to 6,500 last week, according to journalist Liz Skalka.
That’s a one-week increase of 592 per cent.
Ohio Governor Mike DeWine shut down the state’s bars and restaurants on Sunday night, acknowledging that it would be hard workers.
About 500,000 people work in food and dining establishments in Ohio, around 10 percent of the state’s workforce.
‘Look, this is brutally tough, and my heart goes out to them,’ DeWine said.
‘But we have to do what we have to do to save their lives, and not just their lives but the lives of others. And our goal is for us to get through this.’