By Eric Morath 

WASHINGTON -- The first shoots of an economic recovery from shutdowns caused by the coronavirus pandemic are starting to emerge, but the U.S. is likely to face a sustained period of record-high unemployment.

Policy makers confronting that possibility are preparing plans to offer additional stimulus to the economy in the coming weeks and months.

White House economic adviser Kevin Hassett said Sunday that he already sees signs a rebound is occurring, pointing to businesses reopening and credit-card data showing consumers are starting to increase spending.

Still, he said May's unemployment rate, which measures joblessness in the middle of the month, could "end up with a number north of 20%." April's rate, 14.7%, was the highest on record back to 1948.

"I think we're very, very close to an inflection point in terms of business activity, and probably about a month away in terms of employment," he said on CNN's "State of the Union."

The Trump administration is in talks with Congress on a fourth pandemic-relief bill, Mr. Hassett said. He demurred when asked if President Trump supports extending a $600 weekly boost to unemployment benefits past July. House Democrats have proposed extending those enhanced benefits into early next year.

"It looks like the economy is picking up at a very rapid rate," Mr. Hassett said. "In which case we could potentially move on to other things that the president has mentioned, like the payroll tax cut and potentially even a capital-gains holiday."

Mr. Hassett, an economist, said he thought the unemployment rate would begin to fall in June, but would remain above 10% this fall, when Americans head to the polls for the presidential elections. Voters, he said, will be focused on a rapidly improving economy, not a historically high rate of joblessness.

By the fall, "all the signs of economic recovery are going to be raging everywhere," he said, adding businesses have the capacity to quickly ramp up and that unemployed Americans are ready to return to work, factors that could fuel a fast recovery.

U.S. employers could be adding multiple-millions of jobs a month by fall, said Heidi Shierholz, former chief economist at the Labor Department under President Obama. "But that wouldn't be nearly enough to dig out of this unprecedented hole that is still getting deeper," she said.

U.S. employers cut more than 21 million jobs in March and April and economists expect that figure will grow in May. Further job loss would be consistent with the unemployment rate rising to 20%.

Ms. Shierholz said rapid and sustained employment growth would require more testing and contact tracing for the coronavirus, "so people feel safe going back to their jobs," she said. "It's possible that can happen, but I don't see authorities getting the infrastructure in place to make that happen."

Economists' views vary widely, from those who expect the economy to largely recover this year to those who expect the recovery to take more than five years. Many say that how the pandemic unfolds, and if a vaccine is developed, will play a large role.

Federal Reserve Bank of Boston President Eric Rosengren said he expects the unemployment rate to remain in double digits through the end of this year. Speaking on CBS's "Face the Nation," he added it will take much longer for the economy to recover to prepandemic levels. The unemployment rate was 3.5% in February, a 50-year low.

"Getting back down to the low levels of unemployment we saw at the end of February probably takes either a vaccine or other medical innovations that make it much less risky to go out," he said, noting that businesses that have been most affected, such as retail stores, hotels and airlines, need in-person customers. "It's not just that you have to open up the businesses; consumers have to be comfortable going back."

Mr. Rosengren said the central bank will continue to push policies intended to drive down unemployment, but he said Congress will need to pass legislation to provide additional fiscal stimulus.

The Fed will begin issuing loans through its $600 billion Main Street lending program in the next two weeks, he said. The central bank has been preparing to lend directly to middle-market businesses, attempting to fill a hole left by the government's economic-crisis relief efforts.

Mr. Rosengren said the loans would be aimed at businesses "that were doing fine going into the end of last year, but because of the pandemic have now been significantly disrupted." Those include restaurants, hotels and manufacturers. He said the loans would support businesses until consumer spending picks up more robustly.

Write to Eric Morath at eric.morath@wsj.com

(END) Dow Jones Newswires

May 24, 2020 14:19 ET (18:19 GMT)