Trump's Former Economic Adviser Warns Coronavirus Fallout Could Be 'Like the Great Depression'

Kevin Hassett, the former chairman of President Donald Trump's Council of Economic Advisers, warned that the fallout from the coronavirus pandemic could be "like the Great Depression," saying that the legislation passed by Congress was "not going to be enough" to combat the crisis.

Unemployment claims across the country have surged as many states and municipalities have shut down restaurants, bars, clubs, cinemas, gyms and schools in an effort to curb the virus' rapid spread. The stock market has plunged as investors have sold off shares out of concern about the impact of the outbreak. Many major industries are already asking the federal government for multibillion-dollar bailouts.

"Even the big moves that we're seeing right now in Congress are not going to be enough," Hassett said during a Thursday interview with CNN. He stressed that even bigger federal action was necessary for the economy to recover. But the economic analyst also noted that for the situation to get better, progress needs to be made in combating the virus' spread.

"If everybody just stays home for six months, then it's going to be like the Great Depression," Hassett said. He also predicted that the employment numbers for April would be "the worst jobs number you ever saw."

On Wednesday, Trump signed bipartisan stimulus legislation that expanded sick leave benefits to employees affected by coronavirus and also shored up unemployment insurance. Congress and the White House are now working on an even bigger stimulus package, projected to cost about $1 trillion, to help businesses and give direct payments to Americans.

"The first one would be $1,000 per person, $500 per child," Treasury Secretary Steve Mnuchin said in a Thursday interview on Fox Business. "So for a family of four, that's a $3,000 payment."

"As soon as Congress passes this, we get this out in three weeks. And then, six weeks later, if the president still has a national emergency, we'll deliver another $3,000," he explained.

Mnuchin cautioned Republican lawmakers on Tuesday that the fallout from the coronavirus could lead to unemployment as high as 20 percent, CNN and Bloomberg News reported. In February, unemployment remained at a 50-year low of 3.5 percent.

To put the numbers in perspective, during the Great Recession unemployment peaked at about 10 percent in 2009. During the Great Depression, unemployment rose to about 25 percent in 1933.

Josh Bivens, the director of research for the Economic Policy Institute, told Newsweek that there was also a "really crucial need for fiscal aid to state governments—easiest way is through the Medicaid match."

"Also need to plough as much money as possible through existing social insurance and safety net programs—UI and SNAP, for example," Bivens said, referring to unemployment insurance and food stamps. "Big temporary increases in generosity would help a lot. Obviously, as much money as is possible to spend to directly help contain and treat the virus should be done, including free treatment across the board."