Trump's Market Cheerleader

Larry Kudlow’s upbeat economic message isn’t soothing investors unnerved by the coronavirus

- Shawn Donnan, Katherine Burton and Jennifer Jacobs

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 powers of monetary policy—that responding to what’s now a quasi- global coronavirus outbreak and its economic 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 defiantly 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 offa 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 lived with this for decades—they just never work.”