WH Economic Adviser Larry Kudlow: 'I Sure Don't See a Recession'

By Susan Jones | August 19, 2019 | 6:15am EDT
White House Economic Adviser Larry Kudlow (Getty Images/Chip Somodevilla)

(CNSNews.com) - Countering recent buzz about an impending recession, President Trump's chief economic adviser Larry Kudlow told NBC's "Meet the Press" he doesn't see it happening:

Well, I tell you what, I sure don't see a recession. We had some blockbuster retail sales, consumer numbers, towards the back end of last week, really blockbuster numbers.

And in fact, despite a lot of worries with the volatile stock market, most economists on Wall Street towards the end of the week had been marking up their forecasts for the third and fourth quarter. That echoes our view.

You know, what we've got here, consumers are working at higher wages. They are spending at a rapid pace. They're actually saving also while they're spending, that's an ideal situation. So I think actually the second half of the economy is going to be very good in 2019.

No, I don't see a recession. And let me add just one theme, Chuck, just one theme, we're doing pretty darn well, in my judgment. Let's not be afraid of optimism. Let's not be afraid of optimism. It's a funny sign of our times. And I think there's a very optimistic economy going on out there.

Kudlow noted that the U.S. energy sector -- oil, gas and fracking -- has slowed down "a wee bit."

"On the other hand, money is flowing into the United States," he said. "We're the hottest, really the only game in town. And I think that's a very positive development. And we're seeing some pickup in manufacturing jobs and construction jobs as well.

"And incidentally, Chuck, one last point, low interest rates, low interest rates, which is across the spectrum, is very good thing for housing, for construction, for automobile sales. No inflation, virtually no inflation, Chuck Todd.

"So I actually think it's a pretty good story. And again, let me echo my theme, let's not be afraid of some optimism."

Kudlow gave "enormous credit" to President Trump for "transforming and rebuilding this economy," by lowering taxes, cutting regulation, and pursuing trade reform.

Although GDP did not reach 3 percent in the most recent quarter, it's moving in that direction, Kudlow said:

"And let's be honest here, we've faced severe monetary tightening, seven rate hikes in 2017 and 2018. I don't think all that was necessary. It's a miracle we were able to continue as well as we're doing.

"And again, bond rates are falling, 100 basis point decline. That's good for mortgages. That's good for business. And I think the Federal Reserve is going to now be following through, lower interest rates at the low end, because the bond rates have fallen, and that's the way that game usually works. And I think that's going to be a big help."

Kudlow described the ongoing trade scuffle with China as a "tricky business."

"And I think President Trump is working hard to defend the American economy against unfair trading practices and unlawful trading practices and intellectual property theft and forced transfer technology and so forth.

"China is a very special case. And we have to defend American interests, whether it's farming or manufacturing or automobiles or technology."

Speaking about tariffs, Kudlow said, "I think there's a consensus growing, a bipartisan consensus growing, the China story has to be changed and reformed. We cannot let China pursue these unfair and unreciprocal trading practices."

On "Fox News Sunday," Kudlow was asked if the Trump administration is considering any new action to prevent a possible recession:

Well, first of all I don't see a recession at all. Second of all, the Trump pro-growth program, which I believe has been succeeding lower tax rates, bid rollback of regulations, energy opening, trade reform, we're going to stay with that. We believe that's the heart of the free enterprise. We want an incentive-oriented supply-side economy, providing opportunities for everybody across the board.

And as your report mentioned, look, we have blowout retail sales. Let me just pause there.

Consumers, first of all, they're working. The employment numbers are terrific. Second of all, they are working at much higher wages. Third of all, they're spending. And fourth of all, interestingly, they are saving, even while their spending.

That's about as good as it gets and I notice, at the end of the week, a lot of the Wall Street firms have been marking up their economic growth forecasts. I think we're in pretty good shape and I want to just say you know, we should not be afraid of optimism. I don't know what it is, everybody wants to talk about pessimism, recession.

A number of Trump critics, including potential Democrat presidential contenders, are pushing the idea of an economic downturn and recession, seeing it as a way to undermine Trump's re-election.

MRC Store