Kudlow predicts 'big snapback' from coronavirus pandemic for US economy in second half of year
The government has attempted to blunt the economic pain inflicted by the virus outbreak with four stimulus packages
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President Trump's chief economic adviser Larry Kudlow on Wednesday predicted the U.S. economy will experience a big "snapback" from the coronavirus pandemic in the latter half of 2020.
"I think the second half of this year is going to grow, big snapback," Kudlow told FOX Business' Stuart Varney, suggesting growth could be as high as 20 percent.
The American economy shrank at an annual rate of 4.8 percent in the first three months of the year, the sharpest decline since the financial crisis more than a decade ago, the Commerce Department said Wednesday. It was the first drop recorded since the first three months of 2014, and the worst since the first quarter of 2009, when the economy contracted by 4.4 percent in the midst of the financial crisis.
Still, the severity of the coronavirus-induced downturn will be reflected more accurately in the second quarter, when the nation's economy came to a near standstill to mitigate the spread of the virus. Estimates vary widely — Goldman Sachs forecast a decline of 34 percent — but economists agree it'll be grim, possibly surpassing the worst of the Great Depression.
Kudlow talks with reporters about the impact of the Coronavirus on markets in the Brady Press Briefing Room of the White House, Feb. 28, 2020. (AP Photo/Evan Vucci)
"I think the economy is going to suffer through some really bad numbers," Kudlow said.
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In the past five weeks, the number of American workers filing first-time claims for jobless benefits surged to 26 million, indicating the unemployment rate is close to 16 percent, significantly higher than it was during the worst of the Great Recession.
The government has attempted to blunt the economic pain inflicted by the virus outbreak with four stimulus packages, including the $2.2 trillion CARES Act — the largest in recent memory — signed into law at the end of March.
Kudlow did not rule out the possibility of a fifth stimulus package but maintained that any new policy measures need to create incentives to grow in the "longer-term," including a payroll tax holiday, small business regulatory relief, infrastructure plan and liability protection for companies. The liquidity and cash phase of relief, Kudlow said, is coming to an end.
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"I'd like to see a more incentive-minded approach that'll get this economy roaring," he said. "We'll come out of the chute in the second half and go right into 2021 with a very positive rebound."