The White House balks at recession fears as coronavirus outbreak hits US economy
- The coronavirus outbreak has threatened to upend the longest US expansion in history.
- But President Donald Trump has so far steered clear of stimulus measures past administrations pursued during times of crisis.
- The White House has not proposed any official plan to address the stock market gyrations and growth downgrades that have followed the spread of COVID-19.
- For more stories go to www.BusinessInsider.co.za.
As the coronavirus outbreak threatens to upend the longest US expansion in history, President Donald Trump has so far steered clear of stimulus measures past administrations pursued during times of crisis.
The White House, which did not respond to an email requesting comment, has not proposed any official plan to address the stock market gyrations and growth downgrades that have followed the spread of COVID-19. The administration has instead leaned into hopes that the Federal Reserve would take steps to insulate growth.
Lower borrowing costs have been a central focus in discussions on how to provide economic relief amid the outbreak, according to a senior administration official. While other proposals have been brought up, the official cast doubt on whether they would ever become policy.
"A lot of things are under discussion that will never get implemented," said the official, who requested anonymity to discuss internal deliberations.
The independent central bank made an emergency cut to its benchmark interest rate Tuesday, the first time it has taken such a measure since the global financial crisis. Wall Street is almost certain that policymakers will ease again in the coming months, according to the CMEGroup FedWatch tool.
In an interview with Bloomberg published Thursday, White House economic adviser Larry Kudlow painted a rosy picture of the US economy and balked at growing recession fears. Financial markets have dropped sharply over the past week as investors became increasingly alarmed by the outbreak, which has sent global business activity reeling.
"We're not there yet. First of all, the economy is in good shape," Kudlow said. "I am aware that there are going to be some speed bumps coming. But in talking to the president about this, we're not going to panic over this at all, because the economy is sound, and we will get through this, and then the virus will end."
Trump acknowledged last week that even a tax cut package, which the administration has vowed to pursue since before the COVID-19 outbreak, would face an uphill battle in the Democrat-controlled House.
"I think the big thing we're looking for is the Fed to do its job. If the Fed does its job, that's what we are really looking for," he said. "I don't think the Democrats are going to be approving any tax cuts because they like to raise taxes instead of lowering taxes."
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