The American economy is undergoing “a strong V-shaped recovery,” National Economic Council Director Larry Kudlow told “America’s Newsroom” Monday as U.S. equity markets dropped sharply, with investors weighing the possibility of more coronavirus shutdowns in Europe and uncertainty surrounding the 2020 election.
According to Kudlow, “the single biggest factor” in Monday’s selloff “is coming out of Britain” where “they’ve had another bounce in the virus and they may close down the economy.” In addition, Kudlow cited an ongoing correction in technology stocks as another factor.
Despite Wall Street's bad day, Kudlow predicted that the U.S. economy is “going to outperform almost everybody's expectations" and stated that the U.S. is “in much better shape on the virus,” and claimed that "our hot spot spikes this summer have calmed down quite a bit in terms of cases and fatalities.”
“I would also say our economy is in very good shape, at least relatively speaking, in terms of a V-shaped recovery,” he continued.
“Whatever pessimism comes … the reality is, we are recovering, thankfully, prayerfully, as more businesses reopen, as the virus is increasingly contained and the fatalities rates have stayed very low.
“We are in a V-shaped recovery with at least 20% growth coming up,” Kudlow added. “Job numbers have been very good, booming retail sales and housing and autos … These are very positive things and I think that's going to be reflected in the stock market before long.”
Addressing stalled negotiations between the White House and congressional Democrats over a second coronavirus relief bill, Kudlow said: "I'm not sure that this V-shaped recovery has ever depended on the so-called second stimulus package.”
"There are things that could help in there, which is worth negotiating, but if it can't be done, it can't be done," he added.
Despite his optimism, Kudlow acknowledged that the economy has “gone through bloody hell” and that “there is still a lot of hardship out there.”
“The battle is not over, I get that, but we are moving in the right direction,” Kudlow said.
“We've seen, by the way, presidential policies on low taxes and regulations spurring wage growth, family incomes up hugely, 9% during the Trump years, double the prior administration,” he added. “These factors will all play in to a presidential decision.
“Do you want an optimistic, strong, low-tax, low-regulation economy that will spur entrepreneurship or do you want a government-controlled economy that will produce stagnation?” he went on . “I still believe that's the principle frame of this election and I think President Trump has the upper hand.”
Fox Business’ Jonathan Garber and Megan Henney contributed to this report.