By Duncan Smith
Top administration economic adviser Larry Kudlow said Wednesday he believes that third-quarter GDP could surge 21.5 percent in what would easily be the biggest growth quarter in U.S. history as the economy bounces back from being largely shut down due to coronavirus.
Speaking with governors of Arkansas and Kansas at a White House meeting, Kudlow said he based his comments on revised economic estimates from the Congressional Budget Office. The CBO had forecast a second-quarter economic decline of 37.7 percent which he characterized as a “predictably rough pandemic contraction.”
As most states locked down their populations and their economies, it was widely believed that the second quarter of 2020 would be the worst in the country’s history, as Federal Reserve Chairman Jerome Powell predicted a GDP decline of between 30 and 40 percent.
However, now that states are beginning to reopen, there are already signs of economic revival.
Arkansas Gov. Asa Hutchinson, a Republican, told President Donald Trump at the meeting that his state is “back to work” and that the state’s sales tax revenue will likely bounce back faster than first believed.
“We’re back to work today. All of our retail stores are open, all of our retail establishments totally are open, our gyms are open. Our barbers are open, our restaurants,” Hutchinson said, noting that social distancing requirements remain in place.
“We’re going to open up. I call it ‘transition to greatness,’” the president said, adding, “and when Larry Kudlow tells you the numbers, those are really surprisingly good numbers.”
“I think you’re going to have a very good fourth quarter,” Trump noted further, calling the third quarter “a great transition period.”
“States are opening up, some rapidly, safely,” the president said.
Kudlow, citing the Congressional Budget Office, predicted 21.5 percent quarterly annualized GDP growth, adding, “Which would actually, if it came true, would be the biggest growth quarter in American history, or since the data were compiled.”