Is the U.S. economy in a V-shaped recovery or should we brace for a long and bumpy road ahead?
It depends on who you listen to, with two key economic and financial leaders offering very different forecasts on Tuesday (Sept. 29).
Larry Kudlow, one of President Trump’s key economic advisors and head of the National Economic Council, insisted in an interview on CNBC that the U.S economy is experiencing a V-shaped recovery.
“All these figures keep on coming — it sure looks like a V-shaped recovery,” Kudlow said.
Kudlow mentioned the housing market, where prices have surged, surprising analysts, as well as increases in retail sales and sales of new cars, where the numbers have been more mixed.
He also singled out the credit and debit card sector, arguing it has been showing “continued strength” amid a rebound in retail sales.
Car-buying analytics firm Edmunds is forecasting a 31 percent increase in third quarter sales over the second quarter, but an 11 percent drop compared to the same period in 2019.
And while retail sales rose 0.6 percent in August, the momentum appears to be slowing after bigger gains earlier in the summer following the following the end or the easing of coronavirus restrictions across the United States.
By contrast, Philadelphia Federal Reserve President Patrick Harker offered up a much more uncertain economic forecast on Tuesday.
Harker warned more federal stimulus funding will be needed, as well as an aggressive approach to bringing the coronavirus under control, with the up and down cycle of infections holding the economy back, Reuters reported.
Harker said his forecast includes another $1 trillion in stimulus funding, with GDP likely to drop by “several tenths” without it.
The fate of an additional stimulus spending package remains uncertain amid ongoing talks between the Trump Administration and House Democrats, with big differences over the size of the proposed bill, among other matters.
It’s going to be somewhat of a bumpy road,” Harker said. “We’ve really got to get the virus under control because that is driving everything.”