WASHINGTON (Reuters) – Global markets “have gone too far” and investors should not overreact, the White House’s top economic adviser said on Friday as a massive sell-off continued amid fears the coronavirus epidemic could spiral into a pandemic.
FILE PHOTO: Director of the National Economic Council Larry Kudlow speaks to reporters inside the Brady Press Briefing room at the White House in Washington, U.S., February 13, 2020. REUTERS/Tom Brenner
White House economic adviser Larry Kudlow, speaking to reporters at the White House, said markets may continue to get worse but that the Trump administration was not planning to take any “precipitous” policy actions regarding the U.S. economy right now.
The White House would also continue to work with Congress to take any necessary actions, he added in a separate interview on Fox Business Network.
Investor panic over the outbreak sent world share markets down for the fifth straight day. All the major U.S. stock indexes were down again sharply as of midmorning trading, while a rush to safe assets deepened an inversion of the U.S. Treasury yield curve, a classic recession signal.
Trump and his administration have been under pressure this week amid growing unease in the markets and in the country as the United States reported its first possible community-spread case of the disease, which has expanded to numerous countries beyond China where it first emerged.
The Republican president, who is seeking re-election in the November presidential election, has staked his presidency in large part on the strength of the nation’s economy.
“We just think the economy is sound so therefore I just don’t think that this short-term stock-market plunge is going to have any long-term effect,” Kudlow told reporters, adding that he thought Trump’s response to the coronavirus could boost his bid for a second White House term.
Democrats and other critics have raised questions about the administration’s response and how well-prepared it is to manage an outbreak.
The number of additional coronavirus cases in the United States is likely to increase but that does not mean they will “skyrocket” in North America, Kudlow told Fox Business Network.
While there are not currently U.S. supply chain problems that does not mean they will not surface, he added. Late Thursday night, the U.S. Food and Drug Administration announced the country’s first coronavirus-related drug shortage.
Reporting by Nandita Bose and Makini Brice; Writing by Susan Heavey; Editing by Chizu Nomiyama and Frances Kerry