On Sunday, Steve Mnuchin told the nation that in his judgement, Gary Cohn was incorrect to suggest the US was likely already in a recession.
“I don’t think so”, Steve told ABC’s “This Week”, asked about the state of the US economy and whether the longest expansion in history has, in fact, already ended.
“I think the real issue is not the economic situation today, but what economic tools are we going to use to get through this”, Mnuchin added, before insisting that the administration will take the necessary steps.
While Mnuchin feigned confidence on national television over the weekend, he was emphatic Tuesday on the absolute necessity of passing a $1 trillion package aimed at cushioning the blow from the virus containment efforts.
And when I say “emphatic”, I mean that… well, I mean that emphatically. “We’re looking at sending checks to Americans immediately”, he told reporters. “In the next two weeks”.
Well, as it turns out, Mnuchin delivered a dire warning to Senators in a meeting on Tuesday. Specifically, he told lawmakers that without action, the jobless rate could spike to 20% in the US. That’s according to sources who spoke to Bloomberg.
That exceptionally dark prospect presumably rattled the GOP. After all, 20% unemployment is more “depression” than “recession”, and if the US were to fall into a depression ahead of the election, suffice to say Americans might be inclined to just write “BERNIE NOW!” on their ballots and tell both Trump and Biden to take a walk.
Don’t worry, though. 20% wasn’t a “prediction”, but rather one of “several mathematical examples for illustrative purposes”, a Treasury spokeswoman told Bloomberg.
Just for fun, here’s what that would look like:
For what it’s worth, stocks are already pricing in a deep recession.
“At current levels, the S&P 500 is pricing in an ISM of 35 and earnings growth of -25%, both commensurate with severe recessions”, Deutsche Bank wrote late last week, adding that “for the first time in almost a year, equities are pricing in worse growth than 10-year yields (ISM at 39)”.
“When you decimate the restaurant industry, the travel industry, the hotel industry, the airline industry, the cruise line industry, obviously you’re going to take a huge divot out of economic activity”, Jeff Gundlach said Tuesday, on the latest installment of his webcast series.
“Obviously we’re going to have a very substantial negative quarter”, Jeff added. “I just couldn’t believe Secretary Mnuchin actually said he wasn’t sure we’re going to a recession as a result of this, we might actually avoid a recession. That just seems so ludicrous”.
Apparently, it seems “ludicrous” to Mnuchin too – but only behind closed doors.
2 thoughts on “Steve Mnuchin Didn’t ‘Predict’ 20% Unemployment. It Was Just A ‘Mathematical Example’, Ok?!”
March 17: Unemployment – Numbers are starting to trickle in and they don’t look good.
WSJ: State unemployment sees surge in claims.
Slate: Unemployment filers are overwhelming state systems.
US Survey: 18% have hours or job cut due to coronavirus.
A round up of state by state unemployment rates:
Colorado 3,900 on Monday, 6,800 Tuesday as of 10:00 am. Compare with 400 last Monday.
Rhode Island 6,282 on Monday, and 10,000 in less than a week. Compare with 10 last week
Ohio 12,000 on Sunday, 36,645 Monday. Compare with 562 last Sunday.
Connecticut 30,000 since Friday, compared with a typical 3,000 per week.
Hawaii Doubling in second week in March.
Mass. Monday, 19,884 filed, compare with 17,382 entire month of February.
Tennessee 6,092 since March 8, compare to 2,031 previous week
Minnesota 2,000 applications an hour, compare to a usual 20.
New Jersey 15,000 on Monday.
Michigan 5,400 on Monday, compared to 1,300 normal
Kentucky 9,000 on Tuesday, compared with normal 2,000 / week
It’s gonna be more like 40%, possibly more. Lots of people have jobs they can’t do from home. Lots of businesses are shutting down because they have no revenues.
The good news (in a relative sense) is that it should only be that high for 2-5 months.