Bloomberg Businessweek USA - 09.03.2020

E C O N O M I C S

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Bloomberg Businessweek March 9, 2020

Edited by

Cristina Lindblad

and Rebecca Penty

● Larry Kudlow’s upbeat

economic message isn’t

soothing investors unnerved

by the coronavirus

Trump’s Market

Cheerleader

It’s shaping up to be a doozy of a Tuesday morning.

At 10 a.m. on March 3, the U.S. Federal Reserve

announces its first emergency rate cut since the

global financial crisis. Soon after, in a hastily called

press conference, Fed Chair Jerome Powell will tell

reporters—and investors watching from afar who

seem to be quickly losing faith in the healing pow-

ers of monetary policy—that responding to what’s

now a quasi-global coronavirus outbreak and its eco-

nomic fallout will require a “multifaceted” response

from health and fiscal authorities.

A few hours later, the 10-year Treasury will set

off alarms as its yield slips below 1% for the first

time, and President Trump’s preferred gauge of his

performance, the Dow Jones Industrial Average,

will extend its most miserable streak since 2008.

As it all unfolds, Larry Kudlow is installed at

the dining room table that serves as a desk in his

second-floor West Wing office. He remains defi-

antly optimistic—and resistant to the idea that the

unfolding health crisis demands a greater economic

response from an administration for which he’s

become the camera-ready, genial face.

“We’re not there yet. First of all, the economy

is in good shape,” says Kudlow, who heads the

president’s National Economic Council, before

rattling off a flurry of recent positive statistics. “I

am aware that there are going to be some speed

bumps coming. But in talking to the president

about this, a) We’re not going to panic over this at

all, because the economy is sound, and we will get

through this, and then the virus will end. Secondly,

frankly, short-term fixes never work. You know,

these temporary tax cuts or rebates and things

of that sort. You look at the history—I mean I’ve