Trump aide Kudlow says GDP damage from shutdown is temporary: ‘You will see a snapback’
The Trump administration expects the partial government shutdown to hit gross domestic product growth, but thinks the economy will bounce back quickly after it ends, White House economic advisor Larry Kudlow said Tuesday.
The closure, which started on Dec. 22, is in its 32nd day. About 800,000 federal workers have already lost one paycheck and will miss another Friday amid an impasse over President Donald Trump’s proposed border wall.
The White House now expects the funding lapse to sap 0.1 percentage point from GDP growth every week it lasts, double the administration’s initial estimate of the economic damage. While the effect on fourth-quarter 2018 GDP may prove small, the shutdown could knock a chunk off first-quarter 2019 growth.
But Kudlow contended the economic disruption would be “temporary stuff.” He tried to tamp down concerns about wider economic problems in the U.S., as fears about a global economic slowdown intensify.
“I do not acknowledge that the fundamental economy has been adversely affect at all” by the shutdown, the director of the National Economic Council said.
He added: “You will see a snapback right away” when the closure ends.
Polls show Americans increasingly blame Trump for the closure as the economic burden on government workers mounts and services from airport security to food inspections and assistance programs for meals and housing are disrupted. The closure of about a quarter of the government could chip about a half a percentage point off GDP if it lasts the rest of the month, a White House official told CNBC.
In recent weeks, Kudlow has repeatedly shot down the notion of an economic slowdown or looming U.S. recession.