WHEN: Today, Monday, June 22nd
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC interview with National Economic Council Director Larry Kudlow on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Monday, June 22nd. Following is a link to the interview on CNBC.com: https://www.cnbc.com/video/2020/06/22/white-house-economic-advisor-larry-kudlow-doesnt-expect-second-wave-of-covid-19.html.
All references must be sourced to CNBC.
BECKY QUICK: We heard just a few minutes ago about New York City’s new phase of reopening. Many other cities already are back to normal and have been for weeks, but as we also heard earlier coronavirus cases are surging in spots around the country. Aside from the obvious public health implications that could spell renewed trouble for the U.S. economy. Joining us right now to talk about the potential need for more economic stimulus out of Washington is Larry Kudlow. He is White House National Economic Council Director. Larry, it’s great to see you. Thank you for joining us today, and maybe we can just start with the number of coronavirus cases. We have seen more cases out there. I know part of that’s because we’re doing more testing, but the higher percentage of those tests coming back have been coming back with more positive results in some places too. What do you think?
LARRY KUDLOW: Actually, I think nationwide Becky, the positivity rate is still quite low. Well under 10%. Now, I do agree. The numbers quoted to me by the health people – I’m not the expert they are – over the weekend that 37 states that have virtually no problems. There are 13 states that do have hotspots. By the way, part of that is massive new testing. We’re running 500,000 tests per day, so you’re going to pick up some. But I was just interested I was going through it this morning. Some of the hotspots that you probably talked about Arizona no question about it. Florida no question about it, Nevada, North Carolina Oregon, Texas. But on the other hand, Becky just to balance it out. I’m looking at this, Colorado down 30%. Here the Washington DC metro area down 31. Illinois down 36. Massachusetts down 27. Michigan, that’s really something, they are down 80% on case rates. So you know, there are some hotspots. We’re on it. We know how to deal with this stuff now. It’s come a long way since last winter and there is no second wave coming. It’s just, you know, hotspots. They send in CDC teams, we’ve got the testing procedures, we’ve got the diagnostics, we’ve got the PPE. And so, I really think it’s a pretty good situation. Fatality rates, incidentally, fatality rates continue to decline. Looking at the one day and seven-day fatality rates. Less than one half of 1%, even while as you noted cases have gone up in some places. So all in all, I think it’s pretty good situation and of course reopening the economy is the key to economic growth, and we’ve had a whole bunch of green shoots that are showing recovery probably coming on faster that a lot of people thought.
QUICK: Hey Larry, we spoke with Scott Gottlieb earlier today, the former head of the FDA. And his point is that in some of these states where you are seeing hotspots it’s a lot of the younger people, people ages 30 and younger, who are getting it at this point. The good news is a lot of them do not have the same sort of adverse reaction to some of these things. The concerning point would be, do they spread it to their parents to their grandparents to other people they are around who may have some underlying issues. And I guess nobody wants to see the economy shut back down. We want to get out there, we want to make sure things can open up. But would you be in favor of targeted places if you find out that it’s linked to bars and it’s 30 years and younger who are kind of spreading it? Would you be in favor of shutting down potentially some of the bars or slowing things down, just so that things don’t get out of hand?
KUDLOW: Well, look, again, I’m not the public health expert. I think that sort of thing is up to the individual states, the governors. In some cases, the mayors. Scott Gottlieb is a dear friend and a brilliant guy. I’m sure he told you how important it is to maintain best practices, social distancing where applicable, again it’s voluntary, but we’re applicable. Face masks, some kind of cloth face mask. And again, get testing where possible. I’m not going to advocate shutting down any place just if that’s what the locals think is necessary. But again, the costs have shut down in economic terms and psychological terms in addiction terms I mean we’ve learned a lot since last February. So I’ll leave that to the locals, but I sure hope not. I mean look, we’re in a position now – and again I want to get back to the economic story – we’re in a position now, we’re going to come on much stronger in this recovery than a lot of folks thought – maybe than we thought here. And you know there’s been a whole bunch of green shoots on retail sales on employment, on new business applications, on travel, on mobility indexes. Housing demand is strong, auto demand is strong. This is great stuff. The employment was up 3 million in May. The early estimates are about three and a half million new jobs in June that comes out July 2. Just as a reference point, the Congressional Budget Office is suggesting 20% plus Q3, perhaps Q4. If you get 20%, and you get to 5% in Q1 Becky, that will get us back to the prior peak in the economy in 2019. That is wonderful news and the temporary layoffs and furloughs – folks are going back to work. So, I think the rescue package was solid. And I think the economic numbers are coming on. Great. We’ll all hope and pray it continues. And look, let’s have best practices on safety guidelines.
ANDREW ROSS SORKIN: Hey, Larry. I wanted you to comment. I wanted you to comment if you could on the President’s comment over the weekend at that rally in Tulsa, where he effectively said that he said to his people, slow the testing down please. They test and they test. I know that there have been other members of the administration that have suggested somehow that he was joking. I saw with my own eyes, you saw with your own eyes, and I’d also suggest to you that just a week ago, he said, “if we stop testing right now, we’d have very few cases, if any.” So, there’s been a series of comments and quotes that he has made that have not by the way, been suggested to be jokes prior to this.
KUDLOW: Well Andrew, look. I can’t account for all that. I felt he was tongue in cheek when he said it. I was not there. I didn’t see all of that rally in Tulsa. I truly believe it’s tongue in cheek. In the meetings that I’ve attended whenever this subject come up, it comes up in connection with the economic rebound and testing and best practices have always been his belief. And he’s listening to the public health people, Deborah Birx, and so forth. They’re giving him the right advice, I believe he’s taking the right advice. I can’t settle this. I think it was tongue in cheek. You’ll have to ask him. I think the key point though I really do think the key point is, you’ve got again 37 states are in great shape, you’ve got 13 states some odd, where there are hotspots as I mentioned to Becky. I read down the list, you’ve got tremendous declines in positive rates from new cases in major, major states. New York is opening right now that’s a huge chunk of GDP. People are going to come in, or not, but they’re going to be wearing, you know, face coverings if they need to. They’ll be temperature testing if they need to. So, I think we’ve learned a lot. I think private industry, private business is very sensitive to the needs of their workforce. They’re doing everything they can to assure them and to take safety measures. And I think the local governors and mayors are going to have a piece of that, too. So, Andrew I’m not going to make much of it. Sometimes there’s a presidential sense of humor. That works for some but not for all. I can’t convince you if you don’t believe it, but I can assure you that he is – he wants safety and security and economic growth. And that seems to be the trend line right now. I think we’re in pretty good shape, certainly compared to where we were last winter.
QUICK: Larry we hear reports that the administration would like to see a $2 trillion package that is followed up for additional support and stimulus. Where would that money be focused? What needs to happen? And there are a lot of questions because the $600 extra for unemployment that goes into people’s paychecks will end at the end of July at this point.
KUDLOW: Well, look, we’re planning on this – we’re having pretty much constant policy meetings, I’m going to go into one after we all talk. I can’t pinpoint a number. There’s a lot of pre decisional, shall we say rumors or, this and that. Nothing has been completely determined. I will say as a generic matter, first of all, after the July recess. There is likely, highly likely to discuss in the House, the Senate and the administration, some new plans for economic growth. Okay, there’s probably — saw a thing in The Journal today there’s almost certainly going to be a package. What’s in the package, Becky? I don’t want to predict. I will say this. Things the President has talked about publicly. Okay. He has talked about a payroll tax holiday for the workforce. He’s occasionally talked about capital gains tax relief. If you buy something in the next six months, you’ll be excluded from the capital gains for quite some time. There’s a story about private equity in the newspapers today. He wants to help out with some form of tax relief, restaurants, entertainment, athletic contests, things of that sort. We want to help out the tourism business, which has been hurt very badly. We also want to reward people who are re-employing, that are going back to work. I think that’s very important. We’re also concerned about protecting liability insurance and COVID-19 cases for small business and everybody. There may be some targeted spending discussions going on between the three major bodies. All this is up in the air. Those are things the President has said publicly so I’m happy to relay them to you, no decisions have been made.
QUICK: What about your own thoughts just about whether states or municipalities that have been hit particularly hard should get additional funding?
KUDLOW: I’m sorry, Becky. Places what?
QUICK: States and municipalities that may have been hit particularly hard by the pandemic should they get additional funding?
KUDLOW: I wouldn’t want to say at this point but I’ll say we’re looking at everything. Certainly, anything related to COVID-19 deserves serious, serious attention with respect to some additional spending. We will see about that. We will be looking at the whole panoply of options for the states. We’ve worked very well with the states. I think it’s a remarkable achievement President Trump, Vice President Pence has taken the lead on this. Constant discussions with governors, I’ve been engaged, many others in the White House have been engaged to help them out wherever possible. A lot of this of course is the right equipment, the right machinery, the PPE stuff. The masks, the delivery of tests. And don’t forget we are making pretty good progress here, with respect to vaccine development and therapeutic development, which I think is terribly important especially therapies that might help out during the summer months. So, I don’t want to get too specific, we are looking at a whole bunch a whole panoply across the board of possible assistance plans. You know, I’ll say this Becky. You know me, I fully supported the cares act. I think the PPP program, the Payroll Protection Program, probably saved as much as 55 million jobs. I think you saw it in the May numbers, temporary layoffs and furloughs going back to work by 3 million. I think a lot more of that’s coming. I think in general the rescue package was extraordinary. Led by the President, tremendous bipartisan votes in both the House and the Senate. I think, by and large, it worked. I saw a piece in The New York Times this morning that suggested the government’s support programs actually held down the poverty rate. I think that’s remarkable. And I know the income increased a lot in April and probably will continue in May and June. So, I think that tactic worked. We’re proud of it. I think now, I’d love to see us move – this is just me talking – from the rescue mission, you know, through the transition of the reopening into medium and long term economic growth incentives, so we can really have not only a great rebound in the second half, but 2021 to be a big bang year, and so could 2022. We did it once, we had it going great guns, it’s a fundamentally sound economy as the emergency passes in the opening occur. So that’s my view, I’d like to slant it towards economic growth incentives as much as possible.
QUICK: Larry, thank you. It is great to see you this morning and we hope you’ll come back with updates as these conversations progress.
KUDLOW: Anytime. Thanks, Becky. Thank you, Andrew.
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