White House economic advisor Larry Kudlow said on Tuesday that despite the stock market’s recent selloff, the U.S. economic recovery doesn’t necessarily depend on the arrival of more fiscal stimulus from Congress, contradicting statements made by other top officials earlier in the day.
“I don’t think a V-shaped recovery depends on the [stimulus] package,” Kudlow told reporters at the White House, adding that “the economy is improving nicely.”
Trump’s top trade advisor did admit, however, that a “targeted package could be a great help” to certain industries that are still suffering as a result of the virus and efforts to contain its spread.
Kudlow’s suggestion that the U.S. economy could continue to rebound—even without another coronavirus stimulus bill from Congress—appeared to deviate from statements made by both Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell earlier on Tuesday.
In testimony before the House Financial Services Committee, both Mnuchin and Powell argued that additional stimulus would be needed in order to support the U.S. economic recovery until Americans can go back to everyday business as usual.
Powell emphasized that while the economy was in the middle of a rebound, there are still considerable risks to employment and GDP growth if lawmakers can’t agree on an additional coronavirus relief package.
Mnuchin, for his part, said that the White House was ready to reach a bipartisan agreement and that he believes a “targeted package is still needed.”
“Unfortunately, we couldn’t reach an agreement with the other side. And so that was before the judicial issues came up,” Kudlow said. “I wish we could break the stalemate.”
Kudlow’s comments come as many on Wall Street continue to lose faith about the chances for more fiscal stimulus. Lawmakers have been deadlocked for months over the next round of coronavirus stimulus, with negotiations between Mnuchin, White House chief of staff Mark Meadows and Democratic House Speaker Nancy Pelosi at a stalemate. Republicans and the Trump Administration have advocated for a smaller bill that would provide between $1 trillion and $1.5 trillion in aid, while Democrats have insisted on a larger package worth at least $2.2 trillion. The lack of progress with stimulus talks has in large part weighed on market sentiment, causing stocks to recently post three straight weeks of losses.
What To Watch For
Wall Street analysts are warning that the death of Supreme Court Justice Ruth Bader Ginsburg and the ensuing battle over her successor will engulf Washington and further decrease the likelihood of another fiscal stimulus bill. While Trump has pledged to announce his Supreme Court nominee by Saturday, Republicans have already been preparing for a confirmation battle by mobilizing votes in the Senate. So far, the GOP looks to have at least a 51-49 majority, with only two Republican senators, Lisa Murkowski (R-Alaska) and Susan Collins (R-Maine) suggesting they could break ranks and vote against a justice. Stimulus talks are likely to be put even further on the back burner as the Supreme Court battle heats up, experts say: “Fiscal stimulus is really all but dead,” declared Sarah Bianchi, a research analyst at Evercore ISI.
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