Watch the full interview with Kevin Hassett on "Maria Bartiromo's Wall Street", which airs Fridays at 9 p.m. EDT on FOX Business
"The recovery has begun," Hassett told FOX Business' Maria Bartiromo. "I think that, you know, pretty much we're looking for an acceleration over the summer and then a real boom in the second half of the year."
Hassett pointed to the recent retail sales data released Tuesday to prove his point. American shoppers ramped up their spending on store purchases by a record 17.7 percent from April to May, delivering a dose of energy for retailers that have been reeling since the coronavirus shut down businesses, flattened the economy and paralyzed consumers during the previous two months.
The government’s report Tuesday showed that consumers' retail purchases have retraced some of the record-setting month-to-month plunges of March (8.3 percent) and April (14.7 percent) as businesses have increasingly reopened. Still, the pandemic’s damage to retailers remains severe, with purchases still down 6.1 percent from a year ago.
Hassett explained what he thinks was behind the uptick.
"I think that what happened really is that the people who kept their jobs didn't go out and spend much because they were stuck at home, and then the people who were unemployed got very generous unemployment insurance and that piled a whole bunch of cash up into people's accounts," Hassett said during "Maria Bartiromo's Wall Street."
Last month’s bounce-back by consumers comes against the backdrop of an economy that may have begun what could be a slow and prolonged recovery. In May, employers added 2.5 million jobs, an unexpected rise that suggested the job market has bottomed out. Still, a big unknown is whether early gains in job growth, retail sales and other areas can be sustained in the coming months or whether they may plateau at a low level.
“This may very well be the shortest, but still deepest, recession ever,” Jennifer Lee, a senior economist at BMO Capital Markets, told The Associated Press. But she added that it's “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”
The return of shoppers last month was likely aided by the $3 trillion in rescue money that the federal government has provided to companies and households. Americans' retail purchases would need to surge by an additional 9 percent to return to their level before the pandemic.
Any sustained recovery, though, will hinge on an array of factors: the path of the coronavirus; how willing people are to shop, travel and congregate in groups; how many businesses manage to stay open and rehire many workers and whether the government provides additional support.
"When the demand came back then people were really rearing to go," Hassett said.
During a Senate hearing on Tuesday, Federal Reserve Chairman Jerome Powell warned the U.S. economy faces a deep downturn with “significant uncertainty” about the timing and strength of a recovery. He cautioned that the longer the recession lasts, the worse the damage that would be inflicted on the job market and businesses.
Several Democratic senators used their questions to Powell to press for a new congressional rescue bill that would provide increased aid for state and local governments, which face the prospect of mass layoffs because of diminished tax revenue, as well as an extension of enhanced unemployment benefits.
Powell agreed that while both Congress and the Fed have supplied record-high support, the severity of the downturn may require more.
“The shock that the economy received was the largest in memory,” he said, noting that the congressional response and the Fed's response were also the largest on record. “Will it be enough? I would say that there is a reasonable probability that more will be needed both from (Congress) and the Fed.”
Hassett said a fourth round of stimulus may be needed to hasten the recovery process.
The Associated Press contributed to this report.