More Stimulus Not Necessary For A V-Shaped Recovery in the US
President Donald Trump’s top economic advisor, Larry Kudlow, said that the general economic recovery from the coronavirus pandemic does not ultimately depend on additional fiscal stimulus from the US government, despite the fact that a few chosen businesses could benefit more from further stimulus.
“I don’t think the V-shaped recovery depends on the package. But I do think a targeted package could be a great help.” Said, Larry Kudlow
Speaking from the Whitehouse on Tuesday afternoon, Kudlow, the Director of the National Economic Council, added shared information. The Whitehouse has been championing for additional funding for schools and the Paycheck Protection Program.
The Paycheck Protection Program (PPP) formed earlier this year by the Cares Act. This was to provide loans to small businesses. Provided that employers agree to use the money to keep their staff on payrolls.
US Economy is in the Middle of a Comeback
Kudlow said that while it appears the US economy is in the middle of recovery following a recession, some industries that were most affected by containment measures are still reeling from the aftermath. Such sectors, according to Kudlow, could use more help in the form of additional stimulus packages.
“Even though I think the economy is improving nicely, it could use some help in some key areas,” stated Kudlow.
The PPP assistance plan received over $100 billion. According to Kudlow, the Trump administration wanted to extend assistance to small businesses.
“We actually had money-it’s over 100 billion- that could be repurposed to go back in through that plan. I think that plan was very effective. I think it did save perhaps, 50 million jobs.” Said Kudlow
However, due to lack of a consensus with other involved issues, Kudlow stated that the PPP plan did not extend to small businesses as intended.
“Unfortunately, we couldn’t reach an agreement with the other side. And that was before the judicial issues came up. I wish we could break the stalemate.” Kudlow said.
Kudlow’s Advice Contrasts Testimony by the US Fed Chair and Treasury Secretary
He suggested to the US government that the US economy continue on a sharp rebound with no more stimulus. The statement completely contrasts the remarks made by the US Fed Chair Jerome Powell and the Treasury Secretary Steven Mnuchin only a few hours earlier, during their testimony before the House Financial Services Committee.
Both Powell and Mnuchin stated that additional stimulus might be necessary. Especially for certain industries that may require support until Americans resume their day-to-day business operations.
Powell exclusively stated that while the recovery in the US and the global economy is linked to the ongoing stimulus, discontinuation could sabotage future economic news regarding both employment and GDP growth. For employees, Powell stated the long term risk would arise from them burning through their savings. And resulting in being unable to find employment.
“The risk is that over time they go through their savings. They haven’t been able to find employment yet because it’s going to take a while to get 11 million people back to work, so their spending will decline.”
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