Kudlow floats ‘targeted’ economic aid as coronavirus spreads
White House economic adviser Larry Kudlow said Friday that the administration is considering “targeted” relief to workers and businesses hindered by the steadily growing cases of the COVID-19 coronavirus.
Kudlow expressed confidence that the U.S. economy would not need a significant stimulus package to overcome a broad economic slowdown, but floated measures meant to protect industries suffering from efforts to contain the virus.
“The story I am trying to tell is a story of timely and targeted microforms of assistance, not gargantuan, across-the-board, throw money at the problem, which has not worked in the past,” Kudlow told reporters at the White House.
“Because we think that we will get out of this in months,” Kudlow added.
Kudlow insisted that the White House believes the U.S. economy to be “fundamentally sound.” He would not say when the administration expected to make a decision on the “timely and targeted” relief that he referenced.
The Washington Post reported Friday that Trump administration officials were considering deferring taxes for sectors most affected by the outbreak, including the hospitality, cruise, travel and airline industries.
Asked whether he was considering such steps Friday afternoon, Trump said his administration is “looking at different options.”
In an interview with CNBC, Kudlow signaled that the administration was not considering a larger stimulus package but that it could take steps to help certain sectors, mentioning the airline industry in particular.
President Trump and Kudlow have both sought to temper fears about the virus and its potential impact on the economy amid massive financial market volatility and growing fears among economists of a potential recession.
An $8.3 billion emergency coronavirus spending package signed by Trump on Friday included subsidies for $7 billion in loans to be offered through the Small Business Administration. But Trump has sought little else in economic stimulus other than deeper rate cuts from the Federal Reserve and a payroll tax cut that has fallen flat with House Democrats.
“I don’t know that talking about additional tax cuts now, other than for political purposes, is what we ought to be focused on. What we ought to be focused on is what is our medical response to this,” said House Majority Leader Steny Hoyer (D-Md.) this week.
Kudlow continued to downplay concerns about the coronavirus and its impact on the economy on Friday, saying on CNBC that the virus had been “relatively contained.”
More than 200 people in the United States had been sickened by the virus as of Friday and cases have been confirmed or reported across the country, with Colorado, Maryland, Nevada and New Jersey reporting their first cases on Thursday.
Trump, who is visiting Centers for Disease Control and Prevention headquarters on Friday, has touted his administration’s response to the virus as a success and was optimistic that the financial markets would “bounce back” on Friday morning.
Asked whether his administration should take more action to reduce the risk of a recession, Trump said that Americans were spending money stateside instead of traveling overseas.
“Well, what we can do is do what we do. We’re getting a lot of business from people staying, which I’ve always liked anyway — you’ve known that for a long time. But people are staying here and spending their money here as opposed to going to Europe and other places,” Trump told reporters Friday morning before departing the White House. “Now, that’ll change when this goes away and hopefully that will be sooner rather than later.”
Trump then touted Friday’s jobs report showing the U.S. economy added 273,000 jobs in February, exceeding expectations amid concerns about the coronavirus. The president called the numbers “really incredible.”
Even so, the two surveys used to calculate the employment report were conducted for the week including Feb. 12, two weeks before the first case of coronavirus contracted through community spread was confirmed in the U.S.
“Taken together, this was an exceptionally strong employment report — but financial markets have shrugged off the positive data as market participants look ahead to the likelihood of weaker growth in coming months in response to the coronavirus,” said David Berson, chief economist at Nationwide, in a Friday analysis.
Mike Lillis contributed.