White House economic adviser Larry Kudlow said that, as Americas economy opens up, output in the third quarter could surge by 21.5 percent, which he said, if it materializes, would make it “the biggest growth quarter in American history.”
Kudlow, speaking at a White House meeting Wednesday with the governors of Arkansas and Kansas, based his comments on revised economic estimates by the Congressional Budget Office, which predicted a second-quarter annualized contraction of 37.7 percent that the presidential adviser called a “predictably rough pandemic contraction.”
As states have imposed restrictions on work and travel, the second quarter of 2020 has been widely predicted to be the worst in American history, with Federal Reserve Chairman Jerome Powell recently estimating gross domestic product (GDP) in Q2 would fall by between 30 and 40 percent.
But as states begin to lift lockdowns, there are signs of green shoots in the economy.
Arkansas Gov. Asa Hutchinson, a Republican, told President Donald Trump at the meeting that his state is “back to work” and that the states sales tax revenue will likely bounce back faster than expected.
“Were back to work today. All of our retail stores are open, all of our retail establishments totally are open, our gyms are open. Our barbers are open, our restaurants,” Hutchinson said, adding that some restrictions like limits on occupancy remained in place.
“Were emphasizing associate social distancing, but were at work,” he said.
For that reason, Hutchinson said he now projects the states sales tax revenue will be down only 5 percent, not the 10 percent he earlier projected.
“Were going to open up. I call it transition to greatness,'” Trump said, adding, “and when Larry Kudlow tells you the numbers, those are really surprisingly good numbers.”
“I think youre going to have a very good fourth quarter,” Trump added, calling the third quarter “a great transition period.”
“States are opening up, some rapidly, safely,” the president insisted.
Kudlow, citing the Congressional Budget Office, then predicted 21.5 percent quarterly annualized GDP growth, saying, “Which would actually, if it came true, would be the biggest growth quarter in American history, or since the data were compiled.”
A broad shutdown of the country in mid-March to contain the spread of COVID-19, the respiratory illness caused by the Chinese Communist Party (CCP) virus, has resulted in the worst unemployment since the Great Depression.
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