Top White House economic advisers on Sunday dismissed growing concerns that the U.S. economy is headed for a recession.
National Economic Council Director Larry Kudlow and White House Director of Trade and Manufacturing Policy Peter Navarro appeared on a series of Sunday political talk shows to defend the president’s handling of the economy — particularly the ongoing trade war with China — and to downplay recent warning signs that the economy could be headed towards a downturn.
“I tell you what, I sure don’t see a recession,” Kudlow told NBC’s “Meet the Press.” “We had some blockbuster retail sales, consumer numbers toward the back end of last week. Some really blockbuster numbers. And in fact, despite a lot of worries with the volatile stock market, most economists on Wall Street toward the end of the week had been marking up their forecast for the third and fourth quarter.”
“We are doing pretty darn well in my judgment,” Kudlow added. “Let’s not be afraid of optimism. … I think there’s a very optimistic economy going on out there.”
When “Meet the Press” host Chuck Todd pointed out that in 2007, just before the onset of the Great Recession, Kudlow wrote that “there’s no recession coming” and “the pessimistas were wrong.”
“I plead guilty to that,” Kudlow said. Before signing off from his interview, the top White House aide added: “Don’t be afraid of optimism, Chuck.”
Fear of a recession spiked last week when a phenomena known as an “inverted yield curve” took place on Wednesday. That curve meant the benchmark 10-year Treasury note broke below the 2-year rate, a rare occurrence that has reliably predicted past economic recessions. The “inverted yield curve” coincided with an 800-point drop in the stock market, though markets experienced a slight recovery later in the week.
Meanwhile, Trump last week, under pressure from retailers, opted to delay the implementation of more tariffs on Chinese goods until after the Christmas shopping season — a move that served as a quasi-admission that the tariffs do cause some pain for American consumers, which Trump has denied repeatedly amid his ongoing trade war with China. The Wall Street Journal editorial board strongly criticized the administration’s trade efforts this week, tying them to the market volatility.
Trump and his allies have pounded two targets in response to the latest economic news — Federal Reserve Chairman Jay Powell and the media at large, which he claimed is trying to create a recession to harm his electoral chances.
Late last month, Powell cited “trade policy uncertainty” when he announced that the Fed was cutting a key interest rate for the first since 2008. Trump has long advocated for lower interest rates and complained about previous rate hikes.
On Sunday, an NBC News/Wall Street Journal poll showed that 64 percent of Americans support free trade, up 13 points from 2015 and 7 points from 2017. On Trump, 49 percent of respondents approved of his handling of the economy.
Navarro on Sunday pushed back on fears surrounding the inverted yield curve, telling ABC’s “This Week” that, actually, such a curve did not happen “by technical standpoints” because “you have to have a significant spread between short and long rates,” something that did not take place.
All that happened, he said, was “a flat curve.”
“We have the strongest economy in the world,” Navarro said. “Money is coming here for our stock market. It’s also coming here to chase yield in our bond market. Now, what that does is, when foreign money comes in, it drives the prices of bonds up and yields down. That flattens the curves.”
He called on Powell to lower interest rates again, saying that previous rate hikes have “cost” the U.S. “a full point of” Gross Domestic Product growth.
Navarro said he could say “with certainty” that “we’re going to have a strong economy through 2020 and beyond with a bull market,” predicting further rate cuts, monetary easing in Europe, another fiscal stimulus in China, and what he believes is the likely passage of the new U.S.-Mexico-Canada trade agreement this fall.
Hitting back at The Journal’s criticism, Navarro said: “When the Main Street journal starts attacking this administration, that is when we worry.”
“It’s called ‘The Wall Street Journal’ for a reason. OK? It represents Wall Street,” Navarro added. “And ‘The Wall Street Journal’ never saw an American job it didn’t want to offshore.”
On delaying the upcoming round of China tariffs, Navarro said the move was made because U.S. retailers had already locked in purchase orders for the Christmas season and “did not have any power to basically shift the burden back to China.”
Speaking with CNN’s “State of the Union,” Navarro said existing China tariffs are “not hurting anyone here” and are hurting China. Economists have long contended that those tariffs are being felt by U.S. consumers and businesses.
Democrats strongly pushed back on the administration’s assertions. Responding to Navarro on ABC’s “This Week,” 2020 presidential candidate and Sen. Kirsten Gillibrand, N.Y., said she didn’t “think his worldview is reflected in the everyday, kitchen table issues that families are facing.”
And on “State of the Union,” South Bend, Indiana, Mayor Pete Buttigieg, another 2020 presidential candidate, said it’s a “fools errand to think you’re going to get China to change the fundamentals of their economic model by poking them in the eye with some tariffs.”
Buttigieg said U.S. farmers “are getting killed” by the tariffs and jabbed Trump for being unable to reach an agreement with China.
“The president has said repeatedly that he’s on the cusp of getting a deal,” Buttigieg said. “The president has failed to deliver a deal and I expect he will continue to do so and in the meantime, we’re paying the cost of these tariffs.”
Buttigieg said he believes the country is on the cusp of a recession.
“The more important thing is that even during an expansion, most Americans have not been able to get ahead,” Buttigieg said. “That’s a problem. And the president has made it abundantly clear he doesn’t care.”