Kudlow predicts coronavirus will have 'minimal impact' on economy

Kudlow predicts coronavirus will have 'minimal impact' on economy
© Aaron Schwartz

White House chief economic adviser Larry KudlowLawrence (Larry) Alan KudlowMORE on Tuesday said that he thinks the novel coronavirus will have a minimal impact on the U.S. economy.

"Our estimates are minimal impact. The world is not in Wuhan province," Kudlow said in an interview with Fox Business Network. He estimated the outbreak could cost the economy 0.2 percent in the first quarter and potentially another 0.2 percent later on.

China's latest figures on the virus estimated that 20,000 people had been infected, and 425 people had died from it.

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But while Kudlow predicted that the virus would not be "catastrophic" for the U.S. economy, he said it could dampen a promised rise in exports to China resulting from last month's "Phase One" trade deal.

"It is true the trade deal, the phase one trade deal, the export boom from that trade deal will take longer because of the Chinese virus," he said.

Under the terms of the deal, China had promised to increase purchases from the U.S. by $200 billion, but it also said it would do so according to market conditions.

Trade experts raised doubts that China would be able to hit that mark even before the outbreak led to quarantines, flight cancellations and some supply chain disruptions.

Sectors such as autos and auto parts might be hit harder than pharmaceuticals or chipmakers due to supply chain disruptions, he added.

Former Federal Reserve Chair Janet YellenJanet Louise YellenCBO: Prior COVID-19 emergency bills will add .4 trillion to deficit How lawmaker ties helped shape Fed chairman's COVID-19 response Fed chair issues dire warnings on economy MORE echoed Kudlow's sentiment on Tuesday, noting that the economy had overcome similar outbreaks with little long-term damage.

"Typically what's happened in the past is that there might be a short-term impact from an epidemic or pandemic, but in the long term, there seems to be little influence," Yellen said at a Bipartisan Policy Center event in Washington.