Oil dip unsurprising, second-quarter GDP drop could be biggest ever: White House’s Hassett

White House economic adviser Kevin Hassett said on Tuesday the current dip in oil prices is due to a “very short-run thing” and markets will find a new normal.

“This is a very very short-run disruption,” Hassett said in an interview with Fox News a day after the May futures contract for U.S. oil closed at a negative $37.63 a barrel as traders desperate to avoid owning oil fled the markets.

“We’ve never really stopped an economy before and so strange things are going to happen for a short while, while people stay at home and they don’t drive,” he said.

“It’s a very short run thing because people are going to adjust down their production and people are going to adjust down their refining capabilities and pretty soon things will find a new normal.”

Hassett also acknowledged that a decline in second-quarter U.S. gross domestic could be the biggest on record.

“It’s a grave economic situation for sure, that we’re looking at one of the biggest shocks that any major economy has ever experienced and a decline in GDP in the second quarter that could end up being the biggest we’ve ever posted because so many things have shut down,” Hassett told Fox.

He told reporters later at the White House the odds of the U.S. budget being balanced this year are “zero.”

As for the extra coronavirus relief for small businesses, Hassett said he expected it to be approved soon, possibly followed by another major coronavirus stimulus bill from Congress.

Hassett said money to address the drop in state and local revenues needs to be included in that larger package.