White House economic adviser Larry Kudlow told Fox News on Thursday that he expects the economy to grow by over 20 percent in the final quarters of 2020 and that predictions for a sharp, V-shaped recovery remain in play.
“Twenty-percent-plus growth in the third and fourth quarters. You can score that,” Kudlow said in an interview with FOX Business’ “Varney & Co.” “We’re going to have a big bang year next year when the president puts in his free-market reward success policy.”
In keeping with his earlier predictions and in spite of indicators like weekly jobless claims continuing to signal labor market weakness, Kudlow said he expects the economy to muster a sharp, V-shaped recovery.
“From the pandemic, which was a bone-crusher and a heartbreaker, you’ve got a whole series of indicators that are booming,” said the White House National Economic Council Director, singling out strong housing sector data, which is widely viewed as a leading indicator of economic performance.
A recent Commerce Department report showed that new home construction surged by 22.6 percent in July, while applications for building permits—a good indicator of future activity—jumped by 18.8 percent from June. Also, the National Association of Home Builders reported Monday that builders’ confidence this month matched the record high first reached in December 1998. And on Friday, the National Association of Realtors said in a report that existing home sales in the United States surged at a record pace for the second straight month in July as the median home price hit a new record high.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, chief economist at the National Association of Realtors. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
Kudlow, in separate remarks to reporters at the White House on Wednesday, said the number of CCP virus infections should continue to fall since more Americans were now taking greater precautions like wearing face masks, a trend that is not just a good sign for public health but one that bodes well for economic activity.
“I think the economy is on a self-sustaining recovery and it’s a V-shaped recovery,” Kudlow said. “We’re seeing terrific numbers.”
The latest business activity data confirms pockets of strength in the economy, with an IHS Markit survey (pdf) noting strong expansion in U.S. private-sector output in August. While the prior IHS report similarly showed a pickup in metrics like new orders, Friday’s report included more upbeat expectations among business leaders about employment, an area that in last month’s figures flashed weakness.
“Encouragingly, firms signalled an accelerated rise in hiring, as greater new business inflows led to increased pressure on capacity. Some also mentioned that time taken to establish safe businesses [sic] practices had now allowed them to expand their workforce numbers,” said Siân Jones, an economist at IHS Markit, with the report concluding overall that business activity in the United States snapped back to its highest level since early 2019.
Yet despite the unexpectedly sharp increases in Markit’s indexes, U.S. economic data this week has been choppy, with lackluster weekly jobless claims figures showing the number of Americans filing initial unemployment claims surging above 1.1 million after dipping to 971,000 for the first time since March the week prior.
Wall Street’s main indexes inched higher on Friday, with the tech-heavy Nasdaq on track for another record close, although economists, along with officials at the Federal Reserve, warning that as long as CCP virus threat to public health persists, the economic recovery is bound to be fragile.