Larry Kudlow, director of the U.S. National Economic Council, speaks during a Bloomberg Television interview outside the White House in Washington, D.C., U.S., on Friday, Aug. 2, 2019.
Andrew Harrer | Bloomberg | Getty Images
White House economic advisor Larry Kudlow pushed back Sunday against concerns that the economy was weakening, after the bond market flashed a recession signal last week and the Dow suffered its worst day of the year.
“I don’t see a recession at all,” Kudlow said in an interview with Fox News. President Donald Trump’s top economic advisor pointed to strong retail sales and low unemployment as signs that the U.S. economy remained strong.
“I think we’re in pretty good shape,” Kudlow said. A gauge of U.S. manufacturing, however, recently fell to its lowest reading since 2009 as demand weakened and managers slowed hiring.
The bond market also flashed a signal that is normally interpreted as sign a recession is on the horizon. The yield on the 10-year Treasury note briefly broke below the rate for the 2-year on Wednesday.
The Dow Jones Industrial Average dropped 800 points or about 3% as the bond market spooked investors.
White House trade advisor Peter Navarro disputed that the yield curve had inverted. He said the curve was flat and claimed this is a sign that foreign capital is flowing into the U.S., which is bidding up bond prices on the long end and bidding down yields.
“In this case, the flat curve is actually the result of a very strong Trump economy,” he said.
Both Kudlow and Navarro strong defended Trump’s trade war with China. Earlier this month, the president said he would impose 10% tariffs on $300 billion of imports from China.
However, Trump decided to postpone some tariffs until Dec. 15 out of concern that it could impact the holiday shopping season, which seemed to contradict past administration statements that China was shouldering the burden.
Navarro said the U.S. was winning the trade war and dismissed arguments that Americans were shouldering the burden, despite mounting complaints from American farmers, who broadly support Trump, that the trade war is hurting them.
Kudlow, for his part, said the U.S. is locked in a battle with Beijing over technology.
“We are in a kind of technological war with China and we cannot let them steal our family jewels which is the heart of the American economic growth miracle,” he said.