Yellen: Unemployment already likely at 12-13 percent

Yellen: Unemployment already likely at 12-13 percent
© Camille Fine

Former Federal Reserve Chairwoman Janet YellenJanet Louise YellenFed chair issues dire warnings on economy Black Caucus moves to front and center in COVID fight Forget the 'veepstakes' — Biden should make history with finance picks MORE on Monday said the unemployment rate likely already sits at 12 or 13 percent, higher than its peak during the Great Recession.

“If we had a timely unemployment statistic, the unemployment rate probably would be up to 12 or 13 percent at this point and moving higher,” she said in a CNBC interview.

The extent of the economic crash, she said, amounted to a loss of "at least 30 percent" in gross domestic product for the second quarter, but the figures could be even worse, she added.

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“Unemployment rates for a time may go to Depression levels. But this is very different than the Great Depression or the recession in the U.S. economy that we experienced in 2009 and after,” she said. “It’s having severe economic effects, but if we’re successful in supporting people’s incomes during this time... I believe we will be able to get back to a normally functioning economy in much shorter order than during the Great Depression, after the Great Depression, or even the Great Recession.”

Friday's monthly jobs report from the Labor Department showed that unemployment increased from 3.5 percent in February to 4.4 percent in March, but the report is based on data from early in the month, before many state governments closed nonessential businesses and ordered people to shelter in place.

Since then, initial jobless claims have broken records, with nearly 10 million new claims coming in just two weeks.

In her remarks, Yellen also cast doubt over whether the recovery would be as swift as many hoped, with a dramatic dip and a roaring return forming a "V" shape.

“I think a ‘V’ is possible, but I am worried that the outcome will be worse and it really depends to my mind on just how much damage is done during the time that the economy is shut down in the way it is now," she said.

Public health analysts predict that the number of cases nationally will peak as soon as this week, but the various outbreaks around the country are not uniform. While there's some evidence that outbreaks in places such as New York City are coming to a head, others, in places such as Detroit and New Orleans, appear to be ramping up.