Two of President Donald Trump’s top advisers said Sunday that they still expect the US economy to rebound swiftly from the coronavirus pandemic recession even amid a recent surge in cases that’s hit the labor market, shaken consumer confidence, and led states to pause or rollback reopening plans.
“I don’t deny that some of these hot spot states are going to moderate that recovery, but on the whole, the picture is very positive,” White House economic advisor Larry Kudlow said on CNN’s “State of the Union” Sunday. “I still think a V-shaped recovery is in place.”
Kudlow also said that he still expects 20% growth in the third and fourth quarters. He pointed to recent economic indicators that indicate a strong recovery is underway — sales of existing homes jumped a record 21% in June, and retail sales jumped 7.5% after a record spike in May.
In addition, Kudlow sees signs of strength in the labor market even though initial jobless claims increased last week for the first time since March, the Labor Department reported Thursday. At the same time, continuing claims, which represent those receiving unemployment insurance, decreased, suggesting that people are returning to work as states reopen their economies.
“I do think the odds favor a big increase in jobs creation and a big reduction in unemployment” in July, Kudlow said, referring to the government nonfarm payrolls report due Friday, August 7.
Still, there are risks — as coronavirus cases increase, states have had to walk back reopening 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 slumped, erasing all recent gains, spurred by fears of new COVID-19 cases.
Treasury Secretary Steven Mnuchin also cheered the economic recovery in an interview with Fox News on Sunday, where he also said that the GOP plans to introduce its coronavirus relief bill Monday.
“We do think you’re going to see a very big rebound,” in the third quarter, Mnuchin said, citing an estimate for 17% US gross domestic product. “We always said the second quarter was going to be a very bad quarter, that’s not for economic reasons, that’s for health reasons,” he said.
Mnuchin also pointed to June retail sales numbers, which were higher on the year, as a sign that all the money put into the economy has worked. Still, he argued against simply extending the additional $600 weekly unemployment benefit, which expires this weekend.
“It just wouldn’t be fair to use taxpayer dollars to pay more people to sit home than they would get working,” said Mnuchin. The Republican plan has pushed to replace 70% of people’s wages through unemployment, which would likely amount to much less than $600 per week.