The U.S. economy is recovering from the “act of nature” that coronavirus shutdowns created, said White House economic director Larry Kudlow, rejecting a more cautious view of the outlook given last week by Fed Chairman Jereme Powell.
“There’s a very good chance you are going to get the V-shaped recovery,” Kudlow said on CNN’s “State of the Union” on Sunday. “The unemployment rate will fall, and 2021 is going to be another solid, solid year.”
Kudlow said the $600-a-week bonus payments made to some Americans laid off during the coronavirus pandemic will end as planned on July 31 to prevent a “disincentive” for workers to return the jobs market.
Congress in March approved the payments as the economy reeled. Since then, it’s been reported that the U.S. officially fell into recession in March, ending a record 128-month expansion.
President Donald Trump’s chief economic adviser offered bullish forecasts on the economy. The U.S. is on track for 20% growth in the second half of 2020, and a jobless rate below 10% by year-end, he said on Fox News Channel’s “Sunday Morning Futures.”
Kudlow’s unemployment forecast was similar to one offered by Dalls Federal Reserve Bank President Robert Kaplan on Sunday, that the jobless rate would end the year at 8% or more.
In some cases, the top-up payments plus regular unemployment checks add up to more than workers had earned at their jobs, Kudlow said on CNN, adopting a talking point used by several Republican lawmakers.
It’s Official: NBER Says Record Expansion Ended in February
“We are on our way, we are reopening, and businesses are coming back, and therefore jobs are coming back, and we don’t want to interfere with that process,” he said. “At the margins, incentives do matter.”
Trump is looking at a measure that would be a bonus to return to work, Kudlow said, without offering specifics.
The Fed’s Powell gave a mostly downbeat assessment of the economy on June 10, after policy makers held interest rates near zero at a two-day meeting. He suggested there would be a “long road” to full recovery. Kudlow said the Fed chief’s comments had been “really morose.”
Kudlow also said there’s a “panoply of ideas” for a Phase Four economic stimulus bill, and that work wouldn’t begin until after the Congressional recess in July.
“We will have several more weeks to assess the recovery,” he said on Fox.
Kudlow defended a Trump administration decision to not disclose details about companies that received billions of dollars in taxpayer funds through a high-profile federal coronavirus-relief initiative.
Treasury Secretary Steven Mnuchin announced the move, which reversed earlier guidance. “I don’t think it’s necessary” to make the details public, Kudlow said on CNN.
(Updates with Fed’s Kaplan in sixth paragraph.)
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