White House economic adviser Larry Kudlow said the Trump administration is going to stay calm over the economic impact of the coronavirus because America’s economic expansion isn’t at risk.
Kudlow "remains defiantly optimistic — and resistant to the idea that the unfolding health crisis demands a greater economic response from an administration," for which Bloomberg says he’s become the camera-ready, genial face.
Kudlow spoke to Bloomberg amid spiking market volatility as companies and investors try to gauge the potential economic impact of the coronavirus known as COVID-19. The benchmark S&P 500 is now down nearly 7% for the year to date after touching record highs on Feb. 19, Reuters reported.
The coronavirus has led to more than 3,300 deaths worldwide. In the United States, new cases of the vast-spreading virus were reported on Thursday around New York and in San Francisco.
“I am aware that there are going to be some speed bumps coming. But in talking to the president about this, a) We’re not going to panic over this at all, because the economy is sound, and we will get through this, and then the virus will end,” the veteran financial guru and former Ronald Reagan adviser.
“We’re not there yet. First of all, the economy is in good shape,” said Kudlow, who heads the president’s National Economic Council.
“Secondly, frankly, short-term fixes never work. You know, these temporary tax cuts or rebates and things of that sort. You look at the history — I mean I’ve lived with this for decades — they just never work,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
Kudlow says all he’s doing is trying to keep investors focused on the big picture. “I’m there just to remind folks of President Trump’s growth policies and our generally constructive long-term outlook,” he says. “The seesaw was so crowded at the bottom. I was just trying to say things are more balanced than that.”
Kudlow says he can’t help but be upbeat. “Pessimism has never truly set well with me; as though bound by a shirt collar that was too heavily starched, it made me feel uneasy and irascible,” he wrote in the introduction to his 1997 book, "American Abundance."
Kudlow, back then and to this day, argues the case for supply-side tenets including tax cuts, deregulation, free trade, and a gold anchor for the dollar.
Kudlow insists he’s just taking the long-term view on markets and the economy and he is confident the U.S. economy will soldier on, Bloomberg explained.
However, a wave of fear about the coronavirus continues to sweep Wall Street.
U.S. stocks tumbled on Thursday, with shares of banks and travel companies taking a beating, as a new wave of fear about the spread of the coronavirus and its economic impact gripped investors just one day after election results powered a rally, Reuters reported.
“There’s no way to put a framework around this, there’s no way to model it, because you just don’t know," said Carol Schleif, deputy chief investment officer at Abbot Downing in Minneapolis. "The market is clearly trading on emotion today and not fundamentals because they can’t peg where the fundamentals are.”
Meanwhile, U.S. investors pulled slightly more than a net $20.3 billion out of equity mutual funds and exchanged-traded funds during the week ending Wednesday, according to data released Thursday by Refinitiv's Lipper division, Reuters reported.
This report uses material from the AP, Bloomberg and Reuters.
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