While the dire predictions of massive death and infection rates attributed to the new coronavirus have yet to materialize, there is one realm that has indeed been ravaged by the global pandemic so far: the U.S. economy and stock markets.
With the nation all but grinding to a standstill economically due to isolation and quarantine efforts intended to limit the spread of COVID-19, some officials, like Treasury Secretary Steve Mnuchin, are warning of a potential economic catastrophe the likes of which this nation has never seen if the administration and Congress don’t work together to rapidly address the issue, MSN reports.
At a lunch meeting with Republican senators on Tuesday to drum up support for proposed fiscal stimulus measures, Mnuchin reportedly cautioned that inaction by the federal government could result in the unemployment rate skyrocketing up as high as 20%, according to unnamed sources said to be familiar with the discussion.
He also told the lawmakers that the economic downturn brought on by the global pandemic had the potential to be even worse than the 2008 financial crisis in terms of economic fallout, according to MSN.
The secretary was said to have warned that a failure of the federal government to act fast to shore up the economy — specifically by providing financial assistance to small and medium-sized businesses to help them keep paying bills and employee wages — could result in an extraordinary surge in the unemployment rate as workers were laid off or lost jobs due to businesses going bankrupt.
For “illustrative purposes” only
Fox Business reported that the Trump administration has already sought to clarify the dire warning uttered by Mnuchin by noting that what he cautioned was only a worst-case scenario that would result if nothing at all was done in response to the ongoing public health crisis.
Monica Crowley, assistant secretary for public affairs at the Treasury Department, said in a statement, “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.”
Furthermore, some action has already been taken to address the financial aspect of the coronavirus scare, including the Federal Reserve’s decision to slash interest rates to nearly zero and to open up lines of credit to help infuse cash and liquidity into the markets.
On top of that, the Internal Revenue Service (IRS) has announced that most taxpayers, both individuals, and businesses can defer making any payments on taxes due for an additional 90 days, interest-free, after the filing deadline of April 15, according to the Wall Street Journal. And we haven’t even begun to talk about the administration’s proposed stimulus package, which could conceivably inject upwards of $1 trillion in taxpayer funds back into the economy.
Preventing worst-case scenarios
Given the media freakout over Mnuchin’s warning of a possible 20% unemployment rate, which predictably rattled the markets and caused another down day on Wednesday, the secretary sought to further clarify his remarks during an interview with CNBC’s Jim Cramer, vowing to do everything in his power to prevent such an economic calamity from occurring.
“I’ve seen that number in the press,” Mnuchin said of the media reports about his warning. “I didn’t in any way say I think we’re going to have that,” he added. “Let me be clear: If we follow the president’s plan we will not have that.”
Unfortunately, Americans can do little more than simply hunker down and hope that the economy hasn’t completely melted down by the time the coronavirus crisis blows over — and that kind of uncertainty only serves to add more fuel to the already raging inferno engulfing our nation’s economy.