Former Federal Reserve Chair Janet Yellen estimated Monday that the unemployment rate would probably be as high as 12 to 13 percent if we had a real-time gauge for joblessness.
Yellen also said that the economy will probably contract around 30 percent because of the coronavirus and related measures that have shut down large segments of the economy in pursuit of social distancing the control the spread of the disease.
Yellen described the recent reports of initial claims for unemployment benefits, amounting to around 10 million in the past two weeks, as “absolutely shocking.” Claims for unemployment benefits are one of the few ‘real time’ pieces of data the government produces on the economy, showing new claims for the prior weeks. Most other data require weeks or months to be put together.
“If we had a timely unemployment measure, probably the unemployment rate would be 12 or 13 percent at this point. And moving higher,” Yellen said Monday morning in an interview on CNBC.
Yellen said that the economy would likely decline by “at least 30 percent” in the second quarter, an estimate in line with what economists at many banks and other economic forecasters have recently predicted.
“This is a huge, unprecedented, devastating hit,” Yellen said. “My hope is that we will get back to business as quickly as possible.”