The Washington PostDemocracy Dies in Darkness

Top White House economic adviser expresses uncertainty about recovery despite Trump’s confidence

In Washington Post event, Larry Kudlow says he sees some glimmers of hope but acknowledges that labor market weakness could drag on for months

White House chief economic adviser Larry Kudlow speaks during an interview on the unemployment numbers caused by the coronavirus, at the White House in Washington. Some of Trump's top economic advisers emphasized the importance of states getting more businesses and offices open. (Evan Vucci, AP File)

The White House’s top economic official expressed uncertainty on Thursday that America’s economy would swiftly rebound from the downturn caused by the coronavirus pandemic, striking a more cautious tone about the recovery than President Trump has in recent days.

Larry Kudlow, director of the White House National Economic Council, said there are some “small glimmers of hope" and voiced optimism about a dramatic improvement this summer. But he emphasized the coronavirus still poses a unique and unpredictable threat to the nation’s economy and that the overall picture appears bleak.

“Look, it’s really hard to model a virus, a pandemic, the likes of which we have not seen for 100 years,” Kudlow said at a Washington Post Live event. “The numbers coming in are not good. In fact, they are downright bad in most cases. But we are seeing some glimmers, perhaps … there’s a lot of heartbreak here. There’s a lot of hardship here. There’s a lot of anxiety here. It’s a very difficult situation."

Kudlow’s remark suggests Trump’s eager touting of a “tremendous” economic recovery may not be the phrasing used by some of his senior advisers as they confront the crisis and troubling data. On Thursday, the Department of Labor reported that 2.4 million Americans filed jobless claims last week, with close to 39 million filing jobless claims since the pandemic began hammering the U.S. economy in March.

2.4 million Americans filed jobless claims last week, bringing nine-week total to 38.6 million

President Trump’s senior advisers now predict swift economic recovery, despite warnings that major problems could persist

The president has for weeks predicted a rapid economic recovery, saying in early April it will take off “like a rocket ship.”

“I think they’re forecasting a very fast bounce back. I mean, I see great optimism,” Trump said earlier this week.

The nonpartisan Congressional Budget Office has projected an unemployment rate of above 10 percent for 2020 and 2021. The jobless rate was 3.5 percent in February but jumped to 14.7 percent in April. Wall Street analysts have similarly projected the unemployment rate could remain at 10 percent by the end of this year, even with an additional aid package.

Trump has predicted a “V-shaped” economic recovery — in which the economy quickly bounces back to its prior state — and cited the ongoing strength of the stock market.

“I think you’re going to have a ‘V.’ I think it’s going to be terrific,” Trump said at the White House this week. “The stock market is not very short of where it was with all that we went through … And that means a lot of smart people are looking into saying, ‘We are coming back.’ And we’re coming back to that level. I think we’re going to come back to greater than that level.”

Kudlow said he agreed with Trump’s prediction of a V-shaped recovery, but also hedged his forecast by saying the "V" could come in different forms. Many forecasters, including the CBO’s, predict what some economists have said more resembles a “Nike swoosh,” in which it could take well into 2021 or beyond to recover to economic levels before the coronavirus.

“You can have your own Vs. There’s Vs. There are lesser Vs," Kudlow said. “There are combos of Us and Vs.”

Kudlow also acknowledged the unemployment rate could be higher than 10 percent by Election Day in November, while voicing optimism it would be lower. “If I stay with the CBO, they’re going to be very tough numbers,” Kudlow said.

Kudlow also pointed to the stock market, rising demand for car sales, increases in gas and oil prices, low interest rates, and housing demand as “looking better.” Many businesses in May are also reopening as states ease their public health restrictions, Kudlow said.

“It is not conclusive, Robert. I am the first guy to admit that," Kudlow told The Post’s Robert Costa."I’m saying these are glimmers, glimpses, of a little bit of hope and growth. And we will see.”