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Top White House economist Larry Kudlow on Wednesday called for measures including a payroll-tax holiday and deregulation for small businesses, as he said growth would be worse in the second quarter than the first.
Kudlow, who heads the National Economic Council, appeared on Fox Business Network after the government reported that gross domestic product, the official scorecard for the economy, shrank at a 4.8% annualized pace from the beginning of January to the end of March.
Read:GDP sinks 4.8% in the first quarter, biggest drop since 2008 and there is worse to come.
Kudlow predicted what he called a “big snapback” in growth of as much as 17%-20% in the second half of the year. Asked about another stimulus package from Washington, he said it’s important to create “incentives to grow in the medium and longer term,” and listed tax and regulatory relief and infrastructure investment.
President Donald Trump on Tuesday appeared to dismiss the idea of giving Americans another round of direct stimulus payments, saying instead he favored payroll tax cuts.
“That was the thing that I really would love to see happen,” Trump said.
The form of the next round of aid to consumers and businesses suffering from the coronavirus pandemic is unclear. Senate Majority Leader Mitch McConnell recently said he wanted to “push the pause button,” arguing that assistance to state and local governments needed to be “thoroughly evaluated.” House Speaker Nancy Pelosi, meanwhile, is seeking a “major package” of aid for state governments.
See:Next coronavirus aid package may not pass Congress until June as battle lines harden.
Kudlow in the Fox Business interview suggested what he called the liquidity phase of relief is ending, though he did not rule out a new stimulus package.
“I’d like to see a more incentive-minded approach that’ll get this economy roaring,” he said.
U.S. stocks SPX, +2.99%, meanwhile, were up sharply on Wednesday as reports about drug-maker Gilead Sciences Inc.’s GILD, +6.42% clinical trial for a treatment to help patients more quickly recover from COVID-19 offset the news of a plunge in first-quarter GDP.
