White House economic adviser Larry Kudlow said Sunday the U.S. economy, the world’s largest, is “now in a recovery stage” from the debilitating effects of the coronavirus pandemic that closed thousands of businesses, even as forecasters say unemployment figures will remain high for months.
Kudlow told CNN, “I think we are on our way back. 2021 is going to be a solid, solid year.”
He indicated the $600-a-week unemployment compensation supplement the federal government has been paying more than 40 million unemployed workers in addition to state jobless benefits is likely to end as scheduled at the end of July.
“We’re paying people not to work,” he said. “It’s better than their salaries” in some instances. He said a such a boost for unemployed workers might have made sense in the early stages of the coronavirus-caused business shutdowns, but not as the economy recovers.
However, he said the Trump administration is envisioning “some kind of bonus to return to work” for those who have been laid off, although not as much as the weekly federal unemployment compensation supplements that have been paid for 2 ½ months. Some lawmakers have suggested a one-time $1,200 stipend might be paid to returning workers.
“We want people to go back to work,” Kudlow said. “I think people want to go back to work. We don’t want to interfere with that.”
He said state unemployment compensation benefits would not end, They, however, typically only amount to somewhat less than half of what workers are paid and vary widely among the 50 U.S. states.
Despite Kudlow’s upbeat assessment of the U.S. economy, he said the continuing number of coronavirus infections and deaths in the U.S. “is a concern” in impeding the economic recovery.
The U.S. far and away leads all countries across the world in the number of infections, more than 2 million, and the number of deaths, more than 115,000, with tens of thousands of more people expected to die in the coming months.
Kudlow said, “People must observe the [coronavirus] safety guidelines” by maintaining social distancing of at least two meters from other people and wearing face masks “in key places.”
The official U.S. jobless rate was 13.3% in May, although officials say that when a survey error was accounted for, the rate should have totaled 16.4%.
The Federal Reserve, the U.S. central bank, predicted Wednesday that the U.S. unemployment will fall to 9.3% by the end of this year and to 6.5% by the end of 2021, a rosier advance than some economists are forecasting.
Fed Chair Jerome Powell acknowledged the continuing employment hardship for millions of Americans.
“Unemployment remains historically high,” he said at a news conference. “The downturn has not fallen equally on all Americans. The rise in joblessness has been especially severe for lower wage workers, women, African Americans and Hispanics.”
The Fed, at the end of a two-day policy meeting, said, “The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”