Larry Kudlow: ‘No Permanent Damage to the Economy’ from Shutdown

By Melanie Arter | January 29, 2019 | 1:53 PM EST

National Economic Council Director Larry Kudlow (Screenshot)

(CNSNews.com) - National Economic Council Director Larry Kudlow said Monday that the economy is “very strong” despite the government shutdown and that no “permanent damage” was done.

“I still think the economy is very strong. I know there are some disagreements, sut I think, as the numbers shake out, the Commerce Department is reopening, we're going to get a GDP report probably next week, we'll get a jobs report this Friday. So that'll work out,” he said.

“Based on things we've talked about here -- unemployment claims, low; industrial production, strong; business investment, strong; holiday sales, very strong -- I still think we're on a three percent trend line growth rate, and I'm proud of that. I think that the program of lower tax rates, and regulatory rollback, and opening up energy and so forth is working and is continuing to work,” Kudlow said, adding that he thinks the optimists “are going to be right.”

According to a recent CBO analysis on the effects of the partial shutdown, the Congressional Budget Office estimated that the shutdown “delayed approximately $18 billion in federal discretionary spending for compensation and purchases of goods and services and suspended some federal services.”

The analysis also said, “In the first quarter of 2019, the level of real GDP is estimated to be $8 billion lower than it would have been—an effect reflecting both the five-week partial shutdown and the resumption in economic activity once funding resumed.”

 

When asked whether he considered the estimates valid that the shutdown cost the economy between $8 billion and $11 billion, Kudlow said, “You know, I looked at them. I think you're referring to CBO numbers that came out today. We frequently disagree with CBO. With all respect, they're doing the best job they can. I get that.

“No, I don’t -- I won't acknowledge any of that right now, and in a $20 trillion economy, it's awfully hard to make even the best guesstimates of those kinds of small fractions of numbers. That's what you're looking at here. Let's see how it rolls out,” he said.

Kudlow said there will be a GDP report in a week for the fourth quarter.

“It'll take longer for the first quarter. As I've said many times, I think you have just a whole bunch of very temporary factors, and now that the government has reopened, the switch goes right back on. There's certainly no permanent damage to the economy,” he said.

Kudlow emphasized that he has “the greatest of respect to my friends at CBO, who often disagree with us and do not acknowledge the importance of our pro-growth tax cuts -- just to put an editorial in -- no, I don't really agree. Sorry.”

 

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