WHEN: Today, Friday, March 6, 2020
WHERE: CNBC’s “
The following is the unofficial transcript of a FIRST ON CNBC interview with National Economic Council Director Larry Kudlow on CNBC’s “Squawk on the Street” (M-F 9AM – 11AM) today, Friday, March 6th. The following is a link to video of the interview on CNBC.com:
All references must be sourced to CNBC.
CARL QUINTANILLA: The virus volatility of course continues to weigh on the street. The President said last night that he hopes it won’t have a long-term economic impact but said they have, quote, “plans for every single possibility.” Who better to talk about that and the jobs number than the National Economic Council Director Larry Kudlow, who joins us from Washington. Larry, good morning. Good to see you.
LARRY KUDLOW: Thank you, Carl. I appreciate it very much.
CARL QUINTANILLA: Let’s start with the jobs number. It’s a good one, as we know. 273. We’ve been talking to the desk this morning about how relevant it is, given what we appear to be heading into. What do you think?
LARRY KUDLOW: Well, I think it’s very relevant. Look, this is a gigantic number. And 273, by the way, plus 85,000 jobs in the prior two months in an upward revision, so the total is 358,000. And that’s a gigantic number. So, my point here is that we have argued, I believe, the economy is fundamentally sound, even getting stronger through the winter months, excluding the virus problem. We’ll talk about it in a moment. But we’re coming in with a strong economic growth base across the board. Jobs, unemployment and wages and even some improvement in manufacturing. Tremendous improvement in housing. Let’s not forget low interest rates will be a positive going forward. All’s I’m saying is, Carl, we know the future growth is going to slow down, certainly in certain sectors. We get that. But coming in with a strong base like this, gives, I think, should give us much more confidence about what the future holds in relation to the human tragedy side, which of course is the coronavirus. I’ve argued and I will continue to argue: economic problems are going to be temporary and short-lived. Virus is not going to last forever. Human side, a lot of difficulties there. I get that. I understand that. But still we have a strong economic base and to be honest with you, pro-growth supply side policies of President Trump are working.
CARL QUINTANILLA: Well, let me ask you, first of all, Larry, thank you so much for coming on again and always being faithful. There was a piece today by Jason Fuhrman, and I know you know him, and I know him and he’s a smart fellow. And he’s saying Congress should send you $1,000 and another $500 for each of your children as soon as possible. Talking about multiple – $350 billion, Panic or intelligent?
LARRY KUDLOW: Well look, Jason is a longtime friend and a very smart fellow. I don’t agree with his point of view. I don’t think we should just be throwing money and throwing cash in these short-term rebates kind of models that have never really worked in the past. And by the way, we don’t even know – I mean, let me come back to this can we possibly do this, Jimmy, fact by fact, day by day because we don’t know what the magnitude of the economy might be in terms of a slowdown. We don’t actually know what the magnitude of the virus is going to be. Although frankly, so far it looks relatively contained. And we don’t think most people — I mean the vast majority of Americans are not at risk for this virus. But in terms of what my friend, Jason Fuhrman said, look, NEC and Treasury, Steve Mnuchin and I and staff, have been talking about this. And we would prefer a targeted approach, a rather micro approach, if you understand. Let’s think about individuals who might lose paychecks because they have to stay home, if they get the virus. Let’s think about small businesses, might get hurt by this. Perhaps we would look at some sectors. I know you all talked about airlines. We met with the airline executives a couple days ago in the Oval. We would like to be targeted and timely, Jimmy. Not the gigantic macroeconomic fix. I think that’s the issue. And we really have to wait for more information, almost on a day-by-day basis, before we can take action. One quick fast point, Jim. I don’t mean to filibuster here. But John Taylor was on from Stanford University earlier on your network, and he made a very good point. Let’s not forget, we have automatic stabilizers in the budget, okay? If the unemployment rate should go up, and right now, it’s still 3.5%, 50 or lower, but if it does go up, unemployment insurance, food stamps, various welfare related programs, those are automatic. You don’t have to go for additional appropriation. So, I just don’t want to panic on the economy, which looks sound. I don’t want to panic on the virus, which, frankly, most Americans are not at risk. And I don’t want to panic on policy measures. Let’s try to be calm and not overreact.
DAVID FABER: And Larry, it’s David. I certainly understand that. But you know, it depends who you talk to. As you point out, of course, it’s very difficult to know everything at this point. There are so many open-ended questions. But when I speak to people who are reviewing the primary data and material that’s available from China, where of course the outbreak has been by far the worst, they’re not particularly sanguine on the U.S. response at this point. They tell me, in fact, if we wanted to contain the virus, we would need to do what China has done. We seem unwilling to do that for any number of reasons, including the impact it would have on our economy. And I wonder, does the administration take that into account? Are there simply things you’re unwilling to do that perhaps should be done to contain the virus? Which by the way, many people say, Larry, it’s very hard to say whether it is in any way contained or whether we are not all at risk.
LARRY KUDLOW: Well, I’m not sure where you’re going on that. Look, immediately in January, against the advice of many health professionals, President Trump automatically put on travel bans with respect to China, and then we instituted quarantines for Americans coming back from China and foreign nationals. We have screening procedures set up everywhere. We know there’s problems in Northern Italy. We know there’s problems in South Korea. And we know this is spreading in Europe. We get that, so that’s why we’re setting up screening procedures. We have a travel advisory for a lot of these places. So, look, we took — the President jumped out fast and took very bold steps, as I said in some cases overriding the advice of some of his advisers now. Now, my reading, and this is very difficult, David, and if you disagree, I respect that. The numbers coming out of China appear to be easing. Quite substantially easing.
DAVID FABER Yes.
LARRY KUDLOW: The ratio of people who are catching the virus and the volume has come way down. In fact, everything’s come way down. There is also reports from China. And again, the numbers out of China, we always have to question that, I understand, lord knows. But I’m just saying, it looks like people are returning to work. It looks like factories are starting to reopen. We’ve had people like Tim Cook and Starbucks and others say that. I don’t want to bet the ranch on it. All I’m saying is the numbers we have look to be improving in China. Most of the problem now the accelerations are outside of China and we’re keeping a close watch on that. We have got some issues here with respect to the cruise ship and the nursing home and all that. But, David, we’re doing everything we can do. We got the test kits now out in huge size. Millions of people are going to be tested. Folks should not run around grabbing these masks because that should be for the professional health care people. The masks themselves don’t really work for individuals. And here is the other thing, I talked to Tony Fauci, I think he’s an extremely capable guy. If you get it, if you get it, 80% come out of it with no problem. Now, pre-existing conditions, yeah, very cautious. Elderly people, you know, we had problems in some of these senior assistance homes. Those things you have to exercise common sense to stay away as much as you can. But, for most people, if you’re healthy, you should go to work. Go about your business. That’s our advice. And even regarding transportation which may be hit, the airlines, they are calm about it but they are in trouble in some of their numbers. Look, domestic flight, for the most part, is in good shape. If you stay away from the travel warning countries, international flight likewise. So, I don’t want to downplay anything. Worry about the effect on human beings for heaven’s sake. But I’m just saying, let’s not overreact.
DAVID FABER: I hear that, Larry but a lot of the –
LARRY KUDLOW: In many ways. American’s should stay at work. We should stay at work.
DAVID FABER: A lot of the health professionals I speak to, Scott Gottlieb, Former FDA Commissioner, would say different things. In particular, about Seattle and about the government response that needs to actually take place. And how we need to be a lot more formidable in our response. And statements like the ones you just made are actually encouraging people to do things that they shouldn’t. And will actually cause the spread of the virus as opposed to it stopping.
LARRY KUDLOW: Well, I don’t — look, Scott Gottlieb is a brilliant guy and he’s a friend of mine. With respect to Seattle, all right, that would be a place you would avoid for now. And Gavin Newsom, Governor Newsom declaring California emergency state, especially Northern California, I understand that. Avoid it. Exercise common sense. But the rest of the country is not suffering from those kinds of breakouts. At least not yet. I don’t want to suggest it might not occur in the future. We’re just trying to do this a day at a time, a fact at a time, if you will. And really, the overriding numbers, most Americans are not at risk. And as I say, 80% of Americans, if you get the infection, are going to come out just fine. Some people have it and don’t even know it because they get through it in a week or two. And I guess one last point, we had the biotech and pharma companies in with the President in the cabinet room a couple days ago. They’re talking about therapies, medicine, coming out this spring or early summer. So, these are all positive developments. I don’t want to reduce the importance of this story. But I’m just saying, with common sense backed up by some of the statistics, I would say if you’re healthy, if you’re on the younger side, particularly, you should go about your business, and not be afraid. So, others may disagree. And I understand that. And I’m respectful of their views. But that’s the way I see it.
JIM CRAMER: Larry, I know that I feel personally schools should close. My school district just closed. I get that. I want to ask you something. When you and I were partners we used to try to think as big as possible. I want to ask you, wouldn’t you right now agree with me that if you could have a Manhattan Project for this, give $1 billion to the brilliant people in our country and say solve this, that that’s better than the totalitarian way the Chinese are solving their problems?
LARRY KUDLOW: Yes, Jim. Absolutely. Now, I’m going to take some water, my mouth is dry. We’re going long and I love to go long with you. But I need a little water.
JIM CRAMER: But you know, Larry, we have ingenious people but are they getting together and doing the things — they’re talking. How about we put them in a place and solve this, Larry?
LARRY KUDLOW: Yes. You’re spot-on, Jimmy. You know, both the thought, the action, and the spirit. We have the pharma and biotech companies in, I don’t know, Wednesday or Tuesday, I don’t recall. It’s been a long week. But they talked among themselves. They’re coordinating and cooperating among themselves. Some remarkable developments are happening, from the private sector, you’re right, not the government, it’s the private sector. Therapies will be available late this spring/summer, medicine, in other words. That’s terrific. They’re beginning the experimental stages of the vaccine testing. That’s going to take longer. Perhaps a year, year and a half. But to your point, this is being done not by state edict, as in China, not by closing down every city in the country, which China did at least temporarily, maybe they had to, I don’t know, I don’t want to go there. But it’s being done by the American private sector, with our technology, which is the best in the world. And again, the President laid down immediately, you know, travel restrictions, travel bans and quarantines to deal with the worst part of this thing and try to keep it as contained as best as possible. I just think the private sector is going to solve this disease as they have, Jimmy, in the past. As you well know. That is what Americans do. This is true, not just for this Coronavirus. This is true for all manners of technology breakthroughs, artificial intelligence, quantum computing, 5G infrastructures and the like. We are the world’s leading technology. We are a free country that believes in free enterprise. President Trump in the Davos, called it the American model of enterprise, Jimmy. And you know, you can boil it down to tax cuts and deregulation. Sure. Terrific stuff. Better trade deals. There is an export boom coming once the virus dies down later in the year. But most of all we believe success and entrepreneurship should be rewarded, not penalized. And that’s what drives these incentives for these red companies.
CARL QUINTANILLA: Larry, it won’t surprise you to know there’s been some frustration with comments you’ve made, largely on our air. One that the virus was almost air tight in terms of containment. The other was that Americans, you said, should consider buying the dip in stocks. That was 9% ago. Are you going to refrain from making comments like that in the future?
LARRY KUDLOW: I don’t know. Are you asking me a question on that?
CARL QUINTANILLA: I guess will you say it again? Should Americans buy the dip now?
LARRY KUDLOW: Yes. Yes. Well, I don’t do timing. But I will say this. Because of my belief that the American economy is sound, and actually during the past three years under President Trump the American economy has improved, that is my view, I am an optimist. I think when you have these corrections in the market, I don’t know what we’re down, the latest quote is, it got down to 13%, correction from the peak, I’m not sure where it is exactly now. Yes, I would say, as I will repeat my view, Carl, long-term investors should think seriously about buying these dips. That is my view. I will repeat that. If I’m not mistaken, on your network, a pretty distinguished investor named Warren Buffett said the same thing. And I think other cool heads are saying that. I want to be calm about this. So, yes. I’ll repeat that. It’s not a timing call. I’m not a tactical guy. Jimmy Cramer is, you know, the best, he’s the stock encyclopedia.
JIM CRAMER: Thank you.
LARRY KUDLOW: I would say long run investors, absolutely. And, Carl, regarding the containment issue I will still argue to you that this is contained. It can’t be air tight. But we are, you know, you look at the numbers here, and I know there are things in front of us, you know. By itself, more testing is going to uncover more cases.
CARL QUINTANILLA: Yes.
LARRY KUDLOW: But in a relative sense relative to our population, relative to ordinary flus, I don’t want to downgrade this thing. This can be human tragedy for individuals who suffer, or lord knows who die, I’ve said that from day one. But I think it is relatively contained. Yes, I do. I’ll stay with that view.
DAVID FABER: Larry, it’s much more serious than the flu, as you know. And it is a virus spread all over the globe in the space of about three months. So, it is certainly something that seems to avoid containment to some extent. My question, though, is about the economy.
LARRY KUDLOW: To some extent. To some extent. Again, I want to stay with this. What the President said, what the Vice President Said, what our top experts say from CDC and elsewhere, really, these are the career health guys who are very good at this. All right? National infection risk is low. Average Americans go about their business because the infection risk is low. There are exceptions.
DAVID FABER: Right.
LARRY KUDLOW: Guidelines. As I say, elderly people, yes. You know, nursing homes, assisted living homes. I understand that. You have to exercise common sense. Washing your hands 15 times a day, you know, using Kleenex when you cough and sneeze. Just commonsense stuff. But they’ve been covered —
DAVID FABER: Of course.
LARRY KUDLOW: 80% of the people who get this infection come out just fine. So, I — I don’t know what adjective you want to use but I still think it’s — we have this pretty well in hand.
DAVID FABER: Finally, Larry, economic activity certainly has slowed. Do you think the likelihood of a recession has increased dramatically?
LARRY KUDLOW: David, where has it slowed?
DAVID FABER: Well, I can judge from the way that corporations are not sending people to go to meetings, conferences are being canceled all over the place, that people are not going to school, not potentially going out as much as they might.
CARL QUINTANILLA: Corporate travel restrictions.
DAVID FABER: Yeah, corporate travel restrictions. I mean, things of that nature will have and take a toll over time.
LARRY KUDLOW: All right. I accept that. I accept all of those points. But look, you just had a remarkable jobs number, with revisions about 350,000. Unemployment is 3.5%. You’re actually seeing pick-ups in wages from this report. Manufacturing, construction, housing has been in a boom. Low interest rates, by the way, will help a good deal over time. I don’t deny what you said. And I know events are being canceled. And I wish they wouldn’t be canceled because I think there may be over reaction in certain cases. As I said, I still think healthy people should go about their business. So, I don’t want to say the future, to use Donald Rumsfeld’s phrase, we have known unknowns. That is the future, that is the future, the contagion future and matters related to that. I think economic growth, in the next quarter, will slow as a result of this. I acknowledge we have seen some modest disturbances in supply chain deliveries. I acknowledge that. Though, in general, ISMs look okay. I think we are in a very healthy economic position. We are going to see a slowdown. You are right about airline travel and conferences and related matters. But I don’t think this is recessionary and I don’t think this is going to be catastrophic. I think, you know, strong economies recover. And look, unlike the financial crisis and related matters, this one is not forever. This is going to run out of steam. This is not going to go on forever. And this especially important as we get these remedies and therapies coming up. That’s the report from the biotech guys. So, yes. Economic slowdown? Yes, we expect that. More cases of contagion? Yes. We expect that. But I think people should not overreact.
CARL QUINTANILLA: Larry, we appreciate your time as always. Especially on days like today. We’ll talk to you soon. Larry Kudlow, National Economic Council Director.
LARRY KUDLOW: Thank you, Carl.
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