Coronavirus could mean 20% unemployment rate without government action: Mnuchin

Rate could near levels seen during the Great Depression if the government does not intervene, Treasury secretary says

The coronavirus crisis stands to do damage to the U.S. economy – and job market – with the potential to send the U.S. unemployment rate much higher.

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FOX Business has learned that Treasury Secretary Steven Mnuchin said during a luncheon with Senate Republicans on Tuesday that it was possible the unemployment rate could reach as high as 20 percent if the administration did not take actions to stabilize the economy.

For comparison, in February the unemployment rate was 3.5 percent.

However, that is only one potential scenario, which the White House doesn't view as likely since it believes it has taken appropriate steps – with additional measures down the pipeline.

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"During the meeting with Senate Republicans today, Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case," Monica Crowley, assistant secretary for public affairs for the U.S. Department of the Treasury, said in a statement.

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However, both the administration and the Federal Reserve have been proactively implementing programs in order to make sure the financial markets function properly and that the consumer can keep spending.

For example, in addition to cutting interest rates to 0 percent over the weekend, the Fed on Tuesday reopened two financial crisis-era programs that are aimed to increase liquidity in markets by boosting lending.

Additionally, the IRS is allowing individuals and businesses owing up to $1 million this tax season to defer payments for 90 days. Businesses, corporations and sole proprietorships owing up to $10 million would be offered the same option.

Mnuchin said that the White House is considering a relief package valued at $1 trillion, which could include direct cash relief for Americans. A source familiar with the matter told FOX Business that those checks could be valued at more than $1,000 – the amount proposed by Republican Utah Sen. Mitt Romney.

A senior administration official told FOX Business that because of these measures, a 20 percent unemployment rate scenario would not likely materialize.

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FOX Business’ Blake Burman contributed to this report.