The Trump administration doesn't have its story straight on how hard coronavirus is going to hit the economy
Associated Press
The Trump administration doesn't appear to have a unified message on the likelihood of a recession.
Trump, Larry Kudlow, and Steven Mnuchin have all responded differently on whether there would be a recession caused by coronavirus.
Their assessments sharply contrasted with those of former administration officials and mainstream economic projections.
Businesses across the nation are closing as a result of the coronavirus, heightening fears of a recession that rivals or surpasses the financial crisis of 2008.
But the Trump administration doesn't appear to be able to get its story straight on the immediate outlook for the American economy and whether there would be a recession.
Here are some of their recent comments on the likelihood of a recession:
Treasury Secretary Steven Mnuchin: "I don't think so. The real issue is not the economic situation today … This is a unique situation. We are going to have a slowdown. Later in the year economic activity will pick up as we confront this virus," he told ABC News on Sunday.
National Economic Council Director Larry Kudlow: "We are going to be challenged. No question about it ... I'm not going to label it one thing or another. We just don't know, the models don't know. There's a lot we don't know," he told reporters at a press gaggle near the White House on Tuesday. He also said "the fundamentals of the economy are strong."
President Trump: "Well it may be. We're not thinking in terms of recession, we're thinking in terms of the virus ... Once this goes away, once this goes through and we're done with it, I think you're gonna see a tremendous, tremendous surge," he said at a White House press conference Tuesday.
They sharply contrasted with former members of the administration who were more blunt about the odds of a recession at home and overseas.
Kevin Hassett, Trump's former chair of the Council of Economic Advisers, said that a global recession was a near-certainty.
"I think that the odds of a global recession are close to 100 percent right now," Hassett told CNN on Tuesday. "I think in the US, we're going to have a very terrible second quarter."
Hassett warned the US could shed 1 million jobs in March. And he said given the accelerated number of firings as workers are laid off, "you're looking at one of the biggest negative jobs numbers that we've ever seen."
Gary Cohn, former director of the National Economic Council for the Trump administration, said the US is already in the middle of a swift economic downturn.
"We are in a recession right now. We are having negative growth," Cohn said Friday on CNN. "And the market is pricing in that uncertainty."
The coronavirus is putting a massive dent into the service and tourism sectors as Americans cancel their travel plans en masse. State governments have also started ordering the closure of restaurants and bars to prevent the virus from spreading any further.
The Trump administration is planning to ask Congress for an $850 billion stimulus package, which would include a payroll tax holiday and substantial economic relief for airlines. The legislation highlights the increasing pressure on the White House and Congress to prevent the pandemic from wreaking further havoc on the economy.
Many experts are warning the US may have already entered a recession given the abrupt halt to consumer spending, which powers 70% of the economy.
Jason Furman, the former head of the Council of Economic Advisers in the Obama administration, said that people are cutting their spending all at once.
"A lot of sectors are being hit, especially the services sector. A lot of income and spending is being reduced," Furman told The Washington Post. "That's just an enormous shock to the economy."
Morgan Stanley, JPMorgan, and Goldman Sachs all forecasted the coronavirus throwing the US economy into a recession, erasing previous expectations of growth.
They cited the abrupt halt to economic activity in the US and around the world as governments begin rolling out "social distancing" and quarantine measures to halt the virus' spread.
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