US economy may shrink around 30%, FED says

Unemployment in the US could peak at 25% as a result of the coronavirus pandemic, according to the chair of the Federal Reserve, amid warnings the June quarter economic figures will be “very, very bad.” The bleak prediction came as Japan slid into its first recession in five years, with forecasts that worse was to come.

In a sober assessment of the economic impact of coronavirus in the US, the Fed chair, Jerome Powell, estimated GDP contraction in the June quarter could be “easily be in the twenties or thirties,” as fallout from the global outbreak worsened.

“So the data we’ll see for this quarter, which ends in June, will be very, very bad,” he said.

Asked about estimates of unemployment reaching 20-25%, Powell said: “I think there’s a range of perspectives. But those numbers sound about right for what the peak maybe.”

Powell expected more people to lose their jobs in May and June but, provided businesses could reopen in a “way that doesn’t create further problems with the virus,” unemployment could start to fall over the second half of the year in the US. But he cautioned: “We won’t get back to where we were by the end of the year. That’s unlikely to happen.”