Aug. 18 (UPI) — White House economic adviser Larry Kudlow and trade adviser Peter Navarro dismissed concerns about a recession Sunday after markets plummeted on Wednesday but bounced back by the week’s end.
Appearing on Fox News Sunday, Kudlow said “there’s no recession on the horizon” citing strong retail sales and low unemployment as evidence the U.S. economy is still strong despite a rollercoaster week on Wall Street.
“Consumers, first of all, they’re working; the employment numbers are terrific,” he said. “Second of all, they’re working at much higher wages. Third of all they’re spending. And fourth of all, interestingly, they are even saving while they’re spending. That’s about as good as it gets.”
NBC News’ Meet the Press host Chuck Todd noted that Kudlow made similar comments in December 2007 ahead of one of the worst economic downturns in U.S. history. Kudlow replied that he would “plead guilty” to his 2007 comments, but said the present situation is not comparable.
“This is not then,” Kudlow said. “Our banks are well capitalized. Our financial system’s in very good shape.”
Kudlow’s comments came after the major U.S. indexes all plunged about 3 percent on Wednesday, with the Dow Jones Industrial Average sliding more than 800 points as the 30-year Treasury bond yield sank to below 2 percent for the first time in history.
Both the 30-year and 10-year bonds stabilized on Friday, however, and the Dow rallied up 306.62 percent, but still ended down 1.5 percent for the week.
Analysts have said inversions to the yield curve have preceded every recession in modern U.S. history, but Navarro — appearing on ABC News’ This Week — said the yield curve is not inverted but flat.
“It is flat, not for — bad reasons, but for good ones,” he said. “We have the strongest economy in the world. Money is coming here for our stock market. It’s also coming here to chase yield in our bond market. Now what that does is, when foreign money comes in, it drives the prices of bonds up and yields down. That flattens the curve.”
Navarro said the Federal Reserve can give the economy a boost by lowering interest rates, and that the U.S. will have a “strong economy through 2020 with a bull market” if the rates are lowered, Congress passes the U.S.-Mexico Canada Trade agreement, if the European Central Bank engages in monetary easing and China implements a second round of financial stimulus.
New York Senator and 2020 Democratic presidential candidate, Kirsten Gillibrand, told This Week she was concerned about the possibility of a recession in part because she views the USMC as a disaster.
“I think it was a giveaway to drug companies in Mexico. It’s going to harm our jobs. President Trump said, ‘No bad trade deals.’ Not only has he entered into them but he’s started a trade ware with China and it’s really harming producers,” said Gillibrand.