Janet Yellen says second quarter GDP could fall 30% and unemployment is already 12% -13%

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Former Federal Reserve President Janet Yellen said the economy is experiencing an “absolutely shocking” slowdown that is not yet reflected in the current data.

If that were the case, she said, the unemployment rate would likely reach 13% while the overall economic contraction is around 30%.

“If we had a timely unemployment stat, the unemployment rate would likely reach 12-13% at this point and rise,” Yellen told Sara Eisen of CNBC in a “Squawk on the Street” interview. She said gross domestic product was down “at least 30% and I have seen much higher figures”.

These figures, she said, look like a depression although they are “in a very different form” from the Great Depression.

“This is an unprecedented and devastating huge blow, and I hope we get back to business as soon as possible,” she added.

However, the former head of the central bank expressed doubts about the resemblance of the American recovery to a “V”, where the brutal and sudden slowdown will be followed by an aggressive recovery once the economy reopens after the struggle against the coronavirus.

“I think a” V “is possible, but I fear that the result will be worse and that it really depends on my mind on the amount of damage suffered during the economic downturn, as it is the case currently, “Yellen said.

This will be determined if employers can bring workers back quickly and if consumers are not too badly damaged to return to spending once the social distancing associated with the coronavirus is canceled.

Recently, the economic data has looked pretty bleak.

A record number of 10 million Americans have filed for unemployment in the past two weeks. The non-farm payroll decreased by 701,000 over the period to March 12. The unemployment rate, including workers outside the labor force and underemployed, fell to 8.7% for the period, compared to 7% for the largest gain in a month on record.

“The more damage like this, the more likely we are to see a” U “, and there are worse letters like” L “and I hope we don’t see something like that”, a said Yellen.

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