A top Federal Reserve official on Sunday threw cold water on White House optimism about the ability of the U.S. economy to forge a “snapback” recovery from coronavirus-inflicted damage.
A trio of White House economic officials went on Sunday news shows and said they expected a very strong second half of 2020 and a roaring 2021. Asked on ABC’s “This Week” if this was a realistic forecast, Minneapolis Fed President Neel Kashkari replied: “I wish it were.”
“What I’ve learned in the last few months unfortunately is that this is more likely to be a slow, more gradual, recovery,” Kashkari said.
“The virus continues to spread. And when we look around the world, there is evidence that when countries relax their economic controls, the virus tends to flare back up again,” Kashkari said.
“The longer this goes on, unfortunately, the more gradual the recovery is likely to be,” he added.
“I would love to see a robust recovery but that would require a breakthrough in vaccines, a breakthrough in widespread testing, a breakthrough in therapies to give all of us confidence that it is safe to go back. I don’t know when we’re going to have that confidence, Ultimately, the American people are going to decide how long the shutdown is,” the Minneapolis Fed president said.
He said he expected the pandemic to go on, in phases, for the next year or two.
Just minutes prior to Kashkari’s interview, Larry Kudlow, who heads the White House’s National Economic Council, said signs pointed to a very strong second half of the year, “probably 20% economic growth” and a tremendous snapback in 2021.
Read:The economy may be in for a ‘square root’ shaped recovery
Trump administration officials strongly backed moves to get the economy reopened.
In fact, Treasury Secretary Steven Munchin said there was a “considerable risk of not reopening. You’re talking about what would be permanent economic damage to the American public,” Mnuchin said on “Fox News Sunday.”
“We’re going to reopen in a very thoughtful way that gets people back to work safely,” the Treasury secretary said.
White House officials defended their decision to wait a few weeks before pushing ahead with another coronavirus relief package.
Kevin Hassett, a senior adviser to President Donald Trump, said officials have a “luxury of a moment to learn about what’s going on” before taking the next relief steps.
“We’ve got a bunch of states starting to turn the lights back on. We’re watching both what happened both to economic activity and frankly the path of the disease as that happens,” Hassett said.
“We expect very quickly we’ll have a picture about how quickly we can recover,” he said.
Trump officials acknowledged the horrendous April unemployment rate did not represent the bottom of the coronavirus downturn. The Labor Department on Friday said the coronavirus cost 20.5 million job in April and the unemployment rate soared to 14.7%.
Hassett said he expect the unemployment rate to rise to 20% in May. Mnuchin and Kudlow echoed this assessment.
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