Economy doesn’t need more stimulus for V-shaped recovery, Trump advisor Kudlow says


Larry Kudlow, director of the U.S. National Economic Council, speaks to members of the media outside the White House in Washington, D.C., U.S., on Monday, June 15, 2020.

Stefani Reynolds | Bloomberg | Getty Images

Larry Kudlow, President Donald Trump’s top economic advisor, said Tuesday afternoon that the broad economic recovery from Covid-19 doesn’t necessarily require additional fiscal stimulus even if select industries or businesses could benefit from additional aid.

“I don’t think the V-shaped recovery depends on the package, but I do think a targeted package could be a great help,” Kudlow said from the White House. “Even though I think the economy is improving nicely, it could use some help in some key, targeted places.”

Kudlow added that the White House has for weeks championed more funding for schools and the Paycheck Protection Program, a facility established by the Cares Act earlier this year that provides loans to small businesses so long as employers agree to use the funds to keep staff on payrolls.

He also acknowledged that while the overall U.S. economy appears to be in the middle of a comeback after a recession, there are still industries that are suffering as a result of the virus and efforts to contain its spread.

“We also wanted to extend the assistance plan, the PPP plan, to small business. I mean, we actually had money – it’s over $100 billion – that could be repurposed to go back in through that plan,” Kudlow added. “I think that plan was very effective. I think it did save, perhaps, 50 million jobs.”

“Unfortunately, we couldn’t reach agreement with the other side. And so that was before the judicial issues came up,” he added. “I wish we could break the stalemate.”

Kudlow’s suggestion that the U.S. economy could continue in a sharp rebound without further aid appeared to mark a deviation from statements made by both Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin just hours earlier.

In testimony before the House Financial Services Committee, both Mnuchin and Powell suggested that additional stimulus may be needed — especially in certain industries — until Americans resume their everyday business per usual.

For his part, Powell said that most forecasters who project further economic recovery in the U.S. assume that Congress will be able to reach a compromise on additional coronavirus relief.

Though the central bank chief was clear to say that economic growth is in the middle of a rebound, he added that there are risks to employment and GDP growth if lawmakers can’t agree on an additional relief package.

“I would say many, most, [forecasters] assume some fiscal action. Fiscal action underlies many, many current forecasts,” Powell said. “What’s happened lately is the economy has proved resilient both to the broader spread of the disease over the summer in some of the southwestern states and also to the expiration of the Cares Act benefits.”

“The risk is that, over time, they go through those savings, they haven’t been able to find employment yet because it’s going to take a while to get 11 million people back to worth, so their spending will decline,” he added. “Their ability to stay in their homes will decline. So, the economy will begin to feel those negative effects at some time.”

Mnuchin said in his testimony that the White House was ready to reach a bipartisan agreement and that he believes “a targeted package is still needed.”

The comments from all three officials came as Wall Street continued to lose faith that no more stimulus is coming. The U.S. stock market is down the past three weeks in part thanks to gridlocked negotiations between Mnuchin, White House chief of staff Mark Meadows and Democratic House Speaker Nancy Pelosi.

The rift between the two sides appeared to widen after the death of Supreme Court Justice Ruth Bader Ginsburg and Republican efforts to fill her seat.



Source link

Discover

Sponsor

spot_imgspot_img

Latest

Lexus trademarks RX450h+ nameplate in Europe

Lexus entered the hybrid segment before a vast majority of its rivals, but it has timidly stayed away from the plug-in hybrid arena....

Land Rover Defender Pros and Cons Review: Surprise, Surprise

Pros Incredible ride Fabulous design Great inline-six engine Cons Some interior cheapness Tiny third row Build quality concerns Perhaps as a result of being deprived of the Land Rover Defender in...

Nissan may tap EV startup Hercules for Titan pickup powertrain

As the rush to battery-powered pickups grabs more headlines, Nissan is said to be interested in getting its slow-selling Titan full-size pickup in...

Stocks enter the manic, exuberant bull market stage, but that doesn’t mean it’s near ending

Traders work on the floor of the New York Stock Exchange.NYSEWall Street needed no warm-up to get rolling into 2021. Investors are limber, money...