Two of President Donald Trump’s top advisers said Sunday they still hope the US economy will recover quickly from the pandemic recession due to coronavirus, even amid a recent surge in cases affecting the labor market, weakening consumer confidence. and lead states to pause or reverse plans to reopen.
“I do not deny that some of these critical states will moderate that recovery, but overall, the outlook is very positive,” White House economic adviser Larry Kudlow said on CNN’s “State of the Union” Sunday. “I still think there is a V-shaped recovery.”
Kudlow also said he still expects 20% growth in the third and fourth quarters. He pointed to recent economic indicators that a strong recovery is taking place: Existing home sales increased a record 21% in June, and retail sales increased 7.5% after a record increase in May.
In addition, Kudlow sees signs of strength in the labor market despite initial jobless claims rising last week for the first time since March, the Labor Department reported Thursday. At the same time, continued claims, representing those receiving unemployment insurance, decreased, suggesting that people return to work as states reopen their economies.
“I think the odds favor a big increase in job creation and a big reduction in unemployment,” in July, Kudlow said, referring to the government’s non-farm payroll report due Friday, Aug. 7.
Still, there are risks: As coronavirus cases increase, states have had to backtrack to reopen plans to deal with a new outbreak. Some data shows that the US recovery is losing steam as the virus spreads, and last week, US consumer sentiment plummeted, erasing all recent gains, fueled by fear to new cases of COVID-19.
Treasury Secretary Steven Mnuchin also applauded the economic recovery in an interview with Fox News on Sunday, where he also said that the Republican Party plans to present its coronavirus relief bill on Monday.
“We think it will see a big rebound” in the third quarter, Mnuchin said, citing an estimate of 17% of the United States’ gross domestic product. “We always said that the second quarter was going to be very bad, not for economic reasons, but for health reasons,” he said.
Mnuchin also pointed to June’s retail sales figures, which were higher for the year, as a sign that all the money invested in the economy has worked. Still, she argued against simply extending the additional weekly unemployment benefit of $ 600, which expires this weekend.
“It just wouldn’t be fair to use taxpayer money to pay more people who feel at home than they could work,” said Mnuchin. The Republican plan has pushed to replace 70% of people’s wages through unemployment, which would probably equate to much less than $ 600 a week.
