White House senior advisor Kevin Hassett told CNBC on Monday he disagreed with Federal Reserve Chairman Jerome Powell’s thoughts on how long it will take the U.S. economy to recover from the coronavirus-related damage.
“I think definitely you’re looking at a very strong third quarter, a very strong fourth quarter and probably a great next year,” Hassett said on “Squawk Box.” “So I guess I disagree that it’s going to take all the way through the end of 2021 with Jay.”
Powell, in a “60 Minutes” interview that aired Sunday, said he believes the U.S. economy will ultimately recover, but stressed that there is much uncertainty around how long it will take to happen. He also said a vaccine for Covid-19 may be needed to have a full recovery.
“We’ll get through this. It may take a while. It may take a period of time. It could stretch through the end of next year. We really don’t know. We hope that it will be shorter than that, but no one really knows,” Powell said.
The fallout from the coronavirus — and state stay-at-home orders and business closures put in place to slow the spread — have caused significant damage to the U.S. economy. States across the U.S. are gradually rolling back those restrictions, although many public health experts warn doing so too soon could lead to more infections and deaths.
Hassett said he feels the economy is already starting to recover, suggesting that activity “bottomed out about the 11th or 12th of April.” He added, “The question is not really, when does the recovery start, because absent a second wave of the disease, it’s kind of already begun.”
Hassett said the availability of an effective vaccine would allow the economy to “start roaring again right away,” because people would start to feel comfortable going out and returning to work.
The longer that takes to happen, the more Powell “is going to be worried,” Hassett said. “The shorter it is, the more we’re going to believe the stuff that we already did was enough to get people across the bridge to the other side.”
The House of Representatives on Friday passed a $3 trillion coronavirus relief package, but Senate Republicans have already signaled their intention opposition to the legislation.
The White House also threatened a veto, but press secretary Kayleigh McEnany said last week that President Donald Trump would be open to another Covid-19 aid measure.
Asked specifically about sending money to states and municipalities facing budget shortfalls, as the pandemic slashed tax revenues, Hassett said the White House was “kind of in wait-and-see mode,” looking at how quickly the economy recovers and whether existing government aid runs out.
“We stand ready to take very strong action if we need to,” he said. “I just doubt that, in the end, the product is going to look much like Speaker [Nancy] Pelosi put out last week.”