The U.S. economy will start to recover in the third quarter after a period of reopening in May and June, Treasury Secretary Steven Mnuchin said Sunday.
“As we begin to reopen the economy in May and June, you’re going to see the economy really bounce back in July, August and September,” Mnuchin said in an interview on Fox News Sunday.
The trillions of dollars in government spending “will have a significant impact” to spur growth, he said. “As businesses begin to open, you’re going to see the demand side of the economy rebound.”
Mnuchin noted his forecast is based on assumptions about how the pandemic proceeds. Reopening will have to be balanced with increased testing, he said.
Many experts don’t think there will be a quick recovery, often referred to as a V-shaped rebound.
Billionaire Barry Diller, the chairman of Expedia Group,
scoffed at suggestions the economy would recover this summer.
“Anyone who thinks this economy is going to bounce…it can’t. The damage that is being done is catastrophic,” Diller said on CBC News’ “Face the Nation.”
He said early September would be a better guess of when employees start to return to work.
Bank of America CEO Brian Moynihan, who also appeared on “Face the Nation,” was more upbeat about the outlook.
Moynihan said the bank’s internal data suggest consumer spending has” leveled off” in recent days and is starting to grow in certain areas after plunging in March and earlier this month.
“That actually provides some hope that, as the economy opens up in pieces and safely, you’ll see that consumer spending continue to grow which will help fuel the U.S. economy,” Moynihan said.
This is a result of the government’s stimulus programs, he said.
The Bank of America CEO noted that Diller was in the entertainment business, where the outlook was more depressed.
Moynihan said Bank of America
economists think the economy will return to growth in the October-December period followed by double-digit growth in 2021.
The Treasury Secretary refused to get drawn into the brewing fight on Capitol Hill over the next round of coronavirus relief, which is expected to include billions of dollars of federal aid to states and local governments. Local governments have been caught in a vise in the wake of the pandemic, finding their health-care costs soaring and sales-tax revenue shrinking.
Senior Republicans in Congress, including Senate Majority Leader Mitch McConnell, are reluctant to provide aid to states while Democrats, led by Speaker of the House Nancy Pelosi, have called it their top priority.
State aid “will be something the Senate and House debate. It will be something we discuss on a bipartisan basis. The president has heard from governors. He wants to speak to governors. This is something we will consider,” Mnuchin said.
In a separate interview on CNN’s “State of the Union” program, Pelosi was asked about criticism from some, including New York Governor Andrew Cuomo, that Democrats missed an opportunity to pass state aid in the bill replenishing the Paycheck Protection Plan that Congress passed last week.
“Just calm down. We will have state and local, and we will have it in a very significant way,” Pelosi said.
She noted Republican senators were not unified on the issue, apparently referring to a report in the Washington Post that some GOP senators would back such spending while others worry about the rising federal debt.
Asked about concerns over the rapid increase in the federal budget deficit and debt-to-GDP levels, Mnuchin fell back on describing the fight against the coronavirus pandemic as a “war,” where concerns about spending and debt are secondary.
“The good news is that interest rates are extremely low,” he noted.
In the interview, Mnuchin also had pointed questions for how China handled the early days of the spread of the coronavirus.
President Donald Trump “wants to understand what China knew and when they knew it,” he said
“If they knew things that they didn’t turn over that could have stopped this, he will hold them accountable,” Mnuchin added.