Former Federal Reserve Chair Janet Yellen reportedly told House Democrats she believes Thursday's new weekly jobless claims figure could be higher than the record 6.6 million set last week after an unprecedented spike in applications for unemployment benefit.
According to The Washington Post, Yellen made the prediction on a conference call with House Speaker Nancy Pelosi and other Democrats as they develop plans for a fourth stimulus package to help steer the American people and their economy through the coronavirus pandemic.
Yellen, who served as Fed chair from 2014 to 2018, told Newsweek she said on the call that the jobless claims "could top last week's, and not that it will. I don't have a forecast for future weeks."
The economist told CNBC in an interview on Monday she thinks the unemployment rate is currently around 12 or 13 percent "and moving higher." The Bureau of Labor Statistics recorded the unemployment rate at 4.4 percent in March.
She also suggested that U.S. GDP in the second quarter could fall by "at least" 30 percent and that she had seen "far higher numbers."
"This is a huge, unprecedented, devastating hit and my hope is that we will get back to business-as-usual as quickly as possible," Yellen told CNBC, but added that unemployment could go "quite a lot higher" before then.
Last Thursday, the Department of Labor reported 6.6 million initial unemployment claims for that week, doubling the 3.3 million from the previous week, taking the combined total to almost 10 million in just a fortnight.
Struggling firms are shedding workers as the economy plummets. Measures to tackle the coronavirus pandemic, including lockdowns and quarantines, have evaporated demand in the economy and there is a deep recession in the offing.
Congress recently passed a $2 trillion stimulus package including rescue loans for businesses big and small, an expansion of unemployment benefit, and checks worth up to $1,200 for individual Americans to help them cope financially with this sudden economic shock.
But with the number of new coronavirus cases and deaths growing sharply in the U.S., which is now the epicenter of the outbreak that began in central China late last year, Congress is preparing to inject yet more stimulus into the economy.
President Donald Trump said on Monday at a White House briefing that another round of direct payments to Americans, as many Democrats are proposing, is "absolutely under serious consideration."
Senate Majority Leader Mitch McConnell, a Kentucky Republican, endorsed the idea of a fourth package in an interview with The Associated Press published last Friday.
"There will be a next measure," McConnell said, adding that there "should be more a targeted response to what we got wrong and what we didn't do enough for" in the previous package and health care must be "at the top of the list."
