Treasury Secretary Steven Mnuchin made the rounds on national media on Sunday, telling anyone who would listen that the Covid-19 pandemic wouldn't shift the economy into recession, even though even perpetual optimists JPMorgan now expect the economy to slide into a technical recession in the coming quarters, while the former chief economist of Alliance Bernstein is bracing for a record crash in US GDP.
"Later in the year, obviously the economic activity will pick up as we confront this virus," Mnuchin told ABC News. "The real issue is not the economic situation today. The real issue is what economic tools are we going to use to make sure we get through this."
NEW: Despite forecasting an economic slowdown, Treasury Secretary Steve Mnuchin tells @jonkarl he does not think the coronavirus pandemic will cause a recession: "Later in the year, obviously the economic activity will pick up as we confront this virus." https://t.co/XkLFkSaaAp pic.twitter.com/sBm0lCojMh— This Week (@ThisWeekABC) March 15, 2020
He told Fox News Sunday that "a big rebound" in economic growth could be seen "later in the year."
Mnuchin's comments were to reassure the public that after one of the most vicious stock market crashes ever, the Trump economy was still humming along.
"I can't predict where the market is this week," Mnuchin said. "But what I can tell you is people who bought stock after the crash in '87, people who bought stocks after the financial crisis did really well.
"We can't ever predict the bottom of the market or the top of the market," Mnuchin said. "There's no question there are businesses that will be severely impacted. We are focused on helping those businesses that need liquidity."
"There's some businesses that are booming," the Treasury secretary continued. "I mean, you look at the stores and the people that are buying certain consumer products. What we've seen from the credit card data, travel is down extraordinary."
He said businesses are making the necessary preparations to contain the fast-spreading virus, adding that cruise lines were suspending operations for a month to limit transmission risk.
Mnuchin said the Trump administration is laser-focused on providing relief for airlines, hotels, cruise ships, and other industries that have been heavily impacted by the virus.
"This is a unique circumstance," Mnuchin was quoted by Bloomberg at a Saturday press conference at the White House.
"There's no question, because of the things that we're requesting to do, there are parts of the economy shutting down or slowing down dramatically."
At the press conference, he said that an $8 billion emergency spending bill and an economic relief package from the House could cushion the economy.
"We have a lot more we need to do with Congress," Mnuchin said. "We will make sure the economy recovers."
Mnuchin and Federal Reserve Chairman Jerome Powell were busy last week, making sure the economy has enough stimulus to thwart a hard landing. However, Mnuchin's latest cheerleading isn't shared by Alan Blinder, an economist and former Federal Reserve vice chairman, who recently told CNBC that the economy could already be in a recession.
"I wouldn't be one bit surprised if when we look back at the data, it is decided ... that the recession started in March," Blinder said. "It takes months to get the data that would be relevant to a call like that. But it wouldn't be a bit surprising to me."
As we noted earlier on Sunday, investors should prepare for a steep decline in GDP in the first half as social distancing could lead to negative growth, hence why the Trump administration is pumping as much liquidity into markets as possible to cushion the decline. While the boost in liquidity could provide temporary stabilization in risk assets, Bank of America's CIO Michael Hartnett already called it : our "working assumption is that as of March 2020 we are in a global recession."