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Unemployment in the U.S. is already at the highest level since the Great Depression, but according to Minneapolis Federal Reserve Bank President Neel Kashkari, Americans should prepare for even more devastating job losses.
“The worst is yet to come on the job front, unfortunately,” Kashkari said Sunday on ABC’s “This Week.” “It’s really around 23, 24 percent of people who are out of work today, and if this is a gradual recovery the way I think it’s going to be, those folks are going to need more help.”
Kashkari is a voting member of the rate-setting Federal Open Market Committee this year.
The Fed has aimed its full firepower at the coronavirus pandemic, which has brought American life to a grinding halt, including slashing interest rates to near zero; launching crisis-era lending facilities and purchasing an unlimited amount of Treasurys.
During the FOMC's April rate-setting meeting last week, policymakers pledged that interest rates will remain near zero until the U.S. has weathered the crisis.
The federal government has also passed four massive aid packages totaling nearly $3 trillion to help dull the economic pain from the virus outbreak. But according to Kashkari, lawmakers may need to pass additional stimulus measures to help what he predicted will be a long and gradual recovery process.
“If this goes on for a long period of time, I think it's going to go on in some phase for a year or two, I think Congress is going to need to continue to give assistance to workers who have lost their jobs,” Kashkari said.
Unemployment has surged in the U.S. over the past two months as the economy essentially came to a near standstill. In the past seven weeks, more than 33 million Americans have filed for unemployment benefits, the highest since the Great Depression.
Economists have forecast a sharp contraction in GDP in the second quarter, including Fed Chairman Jerome Powell, who acknowledged that there may be an "unprecedented" drop in the second quarter.