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Trump's aim to restart economy risks worse damage

Rich Miller and Steve Matthews, Bloomberg News on

Published in Political News

WASHINGTON -- President Donald Trump's desire to get the U.S. economy up and running soon runs the risk of backfiring and making things even worse.

With an increasing number of state and local governments ordering business shutdowns, a call by the president for a return to normal could lead to confusion and undermine the efforts of those municipalities to contain the coronavirus contagion.

"There is the potential, if the president pushes the view we need to get the economy going, to really just sow chaos throughout the country," said Maury Obstfeld, former International Monetary Fund chief economist.

What's more, if an early resumption of activity leads to a bigger spike in virus cases -- as some health experts fear -- that would just end up making the recession deeper and longer.

"If it does lead to a resurgence, the economy would be much worse off than it already is, as it would only lead to second shutdown and a longer period of economic weakness," said Michael Feroli, chief U.S. economist for JPMorgan Chase & Co., who sees gross domestic product contracting at a 14% annualized rate in the second quarter.

There's a lot at stake politically as well. If Trump's call for reopening the shuttered U.S. economy boomerangs and results in more deaths and more economic destruction, his chances of winning reelection are certain to fade.

 

"He faces some very tough decisions," said Stephen Moore, an ally of Trump's and advocate of an early return to work by America. "They may decide the fate of his presidency. He's got a lot riding on getting this right."

Trump said Tuesday that he wants to wind down "social distancing" and reopen the U.S. economy after his 15-day strategy to slow the spread of the virus ends next week. "I would love to have it opened up and just raring to go by Easter," he told a Fox News "virtual town hall."

White House senior economic adviser Larry Kudlow acknowledged that the administration doesn't have the power to order a return to work. "We don't exercise any monolithic authority but guidance is very important," he told reporters Tuesday.

"Public health also requires a good economy," Kudlow said. "It's not 'either-or.' The two have to work together."

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