The U.S. economy could contract at its worst rate since the Great Depression later this year due to the coronavirus crisis, warned Kevin Hassett, who recently rejoined the Trump administration as a senior economic advisor.
The initial look at gross domestic product for the first quarter, out on Wednesday, will be a negative number, Hassett said Monday on CNBC's "Squawk Box." However, he said the real damage to the economy from the coronavirus will be revealed further down the road. "You're looking at something like minus 20% to minus 30% in the second quarter."
The average estimates in the CNBC Rapid Update economic survey as of late last week showed a 5.3% decline in first-quarter GDP and about a 29% contraction in the second quarter.
In a string of dismal data on economic growth as coronavirus lockdowns took hold, the government on Friday said orders for durable goods plunged 14.4% in March.
Hassett, who left his post last summer as chairman of the White House Council of Economic Advisors after two years, said he expects April's unemployment rate, released a week from this Friday, to surge to 16% or 17%.
The unemployment rate in March rose to 4.4% with nonfarm payrolls dropping by 701,000 as the monthly data from the government was only just beginning to show to the collapse already being revealed in weekly jobless claims.
Over 4.4 million more Americans applied for first-time jobless claims for the week ending April 18, bringing total filings for the past five weeks to 26.4 million, wiping out all the job gains seen after the Great Recession.
"The puzzle is incomes are staying relatively high and output is going to zero," Hassett said.
"If the virus does start to go away in a way that makes it so that most every state feels comfortable that it's safe to open up, then we really could be looking at a rapid recovery because the incomes are still there," he added.