Kudlow cited increases in employment, housing starts, manufacturing and retail sales

He said the upsurge in coronavirus cases earlier in the summer did not have much impact on the recovery

“Throwing [out] the spending book and using everybody’s wish list … is not what we’re going to do.”

White House chief economic adviser Larry Kudlow said Thursday that the U.S. is in the midst of an economic boom despite 28 million Americans on the unemployment rolls. He also said the next round of coronavirus stimulus will not include “everybody’s wish list.”

The comments came after the Labor Department released last week’s initial unemployment claims, which rose above 1 million for the 20th time in 21 weeks. The number of claims is five times the level of claims before the coronavirus pandemic began.

Kudlow told reporters he expects 20% growth in both the third and fourth quarters, taking his cue from the stock market, which shot up rapidly after initially moving into bear territory at the start of the coronavirus pandemic.

“The economy right now is in a very strong rebound, which … is a self-sustaining recovery even with the uncertainties about the virus which is always present,” Kudlow told reporters outside the White House.

The remarks were at odds with Federal Reserve Board minutes released Wednesday, which described labor market gains as “modest.” The Fed also warned that continued economic recovery is dependent on containing the pandemic.

They also conflicted with projections Thursday from the Internal Revenue Service, indicating the level of employment could be depressed for years.

Kudlow cited the creation of 9 million jobs in the last three months – about a third of the number lost in March and April – and said the number of housing starts shows the country is in a housing boom.

Government statistics, he said, show both retail sales and manufacturing are registering V-shaped recoveries. The Commerce Department said last week, however, it had not evaluated how much of the retail sales increase was due to inflation, which is running 2.7% ahead of last year.

“To meet rising demand, they are going to have to rebuild inventories, which means more manufacturing, more construction, more jobs,” Kudlow said, after noting inventories collapsed in the second quarter.

Kudlow said the upsurge in coronavirus cases earlier this summer had little impact on the recovery, adding that cases now are down 35% from their peak.

“Even the breakout in the hotspots in late June and most of July really didn’t restrain this recovery very much,” he said. “I think the stock markets are correctly portraying [the situation] – not only a V-shaped recovery, but seeing through to the other side of the virus,” predicting a strong 2021.

As to the next round of stimulus, Kudlow raised the possibility of a new round of tax cuts on top of the payroll tax suspension, which he said the administration wants to see forgiven.

He warned, however, the White House would not go along with a massive spending proposal like the $3.5 trillion package passed by the House in May.

“As regards to spending bills, if it’s smart and efficient we have suggested to our friends across the aisle we would put more money to opening schools,” as well as unemployment benefits and the post office, he said. He also said the administration wants to extend the eviction moratorium and the moratorium on repayment of student loans.

“Some spending not massive, larded up spending,” he said. “Throwing [out] the spending book and using everybody’s wish list … is not what we’re going to do.”

No negotiations were scheduled despite word from House Speaker Nancy Pelosi earlier this week that Democrats would accept a smaller package if it could be enacted swiftly.