White House economic advisor pushes back on recession

Larry Kudlow
OLIVIER DOULIERY/ABACA PRESS/TNS
Economic advisor Larry Kudlow prepares to talk to the media outside the White House on July 26.

BY KATIA DMITRIEVA, HAILEY WALLER AND JORDAN YADOO
BLOOMBERG NEWS/TNS

WASHINGTON — Larry Kudlow pushed back Sunday on the notion that the U.S. economy is headed toward a recession, and said recent phone calls between U.S. and Chinese trade negotiators had produced more “positive news.”

Kudlow, the White House National Economic Council director, and Peter Navarro, President Donald Trump’s trade adviser, made multiple appearances on Sunday talk shows to discuss the economy and China trade prospects after a tumultuous week in financial markets.

“I don’t see a recession at all,” Kudlow said on “Fox News Sunday.” He added that there were no plans for additional fresh measures to boost the economy, and that the Trump administration would stay the course on its current agenda.

“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,” he said on NBC’s “Meet the Press.”

‘FLAT YIELD CURVE’

Navarro, on ABC’s “This Week,” predicted “a strong economy through 2020 and beyond.”

On CNN, Navarro disputed that the U.S. had seen an inverted yield curve, often a forerunner of recession because it signals market expectations for weaker growth ahead.

“Technically we didn’t have a yield curve inversion,” he said on “State of the Union.” “All we’ve had is a flat yield curve.”

Trump on Wednesday lashed out at Federal Reserve Chairman Jerome Powell on Twitter, specifically mentioning the “CRAZY INVERTED YIELD CURVE.”

Navarro once again criticized the Powell and the Fed on Sunday. “The Federal Reserve chairman should look in the mirror and say ‘I raised rates too fast,’” Navarro said on CNN.

Additional Fed rate cuts beyond the quarter-point move in July will be a good thing, Navarro said, and a potential easing by the European Central Bank in September will help Europe’s struggling economy.

TRADE TENSION

U.S.-China trade tension boiled over this month after a brief detente.

The U.S. officially declared China a currency manipulator, and the country responded with a boycott of American farm products and signaling that its currency can help cushion the tariff blow.

Navarro said the U.S. still has “significant structural issues” with China, while Kudlow looked forward to a “substantive renewal” of talks with Beijing. He provided no specifics on the as-yet unrevealed “positive news” out of recent telephone talks between the two sides.

At a time Trump is pursuing trade disputes with China, Europe and others, an NBC-Wall Street Journal poll released on Sunday showed support for free trade among Americans is on the rise.

Almost two-thirds — 64% — see free trade as good for the U.S., an all-time high for the survey series and up 7 percentage points from the last time it was asked, in 2017. Only 27% believe it’s bad because it hurts key industries.

Kudlow, on Fox, discussed Trump’s decision to delay some planned 10% tariffs to December from September. The administration is giving companies time so they won’t “jack up prices,” he said.

TRUMP ON TARIFFS

Trump and his top aides have said repeatedly that Beijing, not U.S. companies or consumers, are bearing the brunt of the tariffs imposed on imports from China.

One key measure of U.S. inflation increased in July, driven by costs of shelter costs, apparel and used cars, and gained the most in a decade in the past two months, the Labor Department reported this month.

Economists say the boost in inflation shows the tariffs are gradually filtering through.

The tariff war has increased prices for goods, and U.S. companies are paying the higher levies, according to a survey by the Federal Reserve Bank of New York.

The U.S. government collected $57 billion in customs duties in the fiscal year that began Oct. 1, according to the Treasury Department.

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