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The U.S. economy will start to recover in the third quarter after a period of reopening in May and June, Treasury Secretary Steven Mnuchin said Sunday.
“As we begin to reopen the economy in May and June, you’re going to see the economy really bounce back in July, August and September,” Mnuchin said in an interview on Fox News Sunday.
The trillions of dollars in government spending “will have a significant impact” to spur growth, he said. “As businesses begin to open, you’re going to see the demand side of the economy rebound.”
Mnuchin noted his forecast is based on assumptions about how the pandemic proceeds. Reopening will have to be balanced with increased testing, he said.
The Treasury Secretary refused to get drawn into the brewing fight on Capitol Hill over the next round of coronavirus relief, which is expected to include billions of dollars of federal aid to states and local governments. Local governments have been caught in a vise in the wake of the pandemic, finding their health-care costs soaring and sales-tax revenue shrinking.
Senior Republicans in Congress, including Senate Majority Leader Mitch McConnell, are reluctant to provide aid to states while Democrats, led by Speaker of the House Nancy Pelosi, have called it their top priority.
Read:What’s behind Republican reluctance to assist states
State aid “will be something the Senate and House debate. It will be something we discuss on a bipartisan basis. The president has heard from governors. He wants to speak to governors. This is something we will consider,” Mnuchin said.
Asked about concerns over the rapid increase in the federal budget deficit and debt-to-GDP levels, Mnuchin fell back on describing the fight against the coronavirus pandemic as a “war,” where concerns about spending and debt are secondary.
“The good news is that interest rates are extremely low,” he noted.
In the interview, Mnuchin also had pointed questions for how China handled the early days of the spread of the coronavirus.
President Donald Trump “wants to understand what China knew and when they knew it,” he said
“If they knew things that they didn’t turn over that could have stopped this, he will hold them accountable,” Mnuchin added.
