Trump, economic team launch quick counter narrative amid market dive, grim Fed outlook

Treasury Secretary Steven Mnuchin on Thursday dismissed the possibility of another economic shutdown, telling CNBC that "we can't shut down the economy again" despite fears of rising coronavirus cases in many parts of the country.

Larry Kudlow, director of the White House National Economic Council, went a step further, criticizing Federal Reserve Chairman Jerome Powell's speaking style. Kudlow also tried to emphasize what he viewed as positive trends in the economy, saying the coronavirus has "completely flattened out."

On Twitter, Trump criticized the Fed after its projection on Wednesday that unemployment would remain at 9.3% by the end of 2020.

"The Federal Reserve is wrong so often. I see the numbers also, and do MUCH better than they do," the president tweeted. "We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021. We will also soon have a Vaccine & Therapeutics/Cure. That's my opinion. WATCH!"

Administration officials are under pressure from a steep drop Thursday in the stock market. The Dow Jones industrial average skidded 1,500 points, or 5.5%, by early afternoon. The Standard & Poor's 500 index sank 4.7%.

Trump has pointed to the stock market's recent rebound as a sign that the economy will come roaring back to life, but many economists and the Fed have cautioned that the recovery will be slow because many companies are still not operating at full capacity and the labor market remains extremely weak.

Large parts of the U.S. economy shut down in March and April as federal, state and local officials tried to stop the spread of the novel coronavirus. Many began allowing businesses to reopen in May, though many still have strict restrictions.

Trump said in late May that "we are not closing our country" if there is a second wave of coronavirus cases.

"I think we've learned that if you shut down the economy, you're going to create more damage," Mnuchin told CNBC on Thursday.

Asked about those comments later Thursday, Mnuchin seemed to leave open the possibility that the economy could be shut down again in an extreme scenario, while stressing that the odds of that happening were remote.

More than a dozen U.S. states are seeing new highs in positive coronavirus cases and hospitalizations, according to Washington Post data, as public health restrictions nationwide are loosened.

"This is the president's decision and not my decision," Mnuchin said. "My comment was based on a set of facts that people gave me. It's my expectation we will make medical progress between now and the end of the year. I don't expect we will need to shut down the economy again. Could there be some rare extreme scenario that occurs that based upon medical advice the president does [shut down the economy]? I think that's extremely unlikely."

Federal lawmakers have for months grappled with competing pressures between safeguarding public health and the impact of restrictions on the national economy. U.S. deaths due to covid-19, the disease cause by the novel coronavirus, have surpassed 100,000, and as many as 2 million Americans are now infected. Economic shutdowns have led to record unemployment numbers and led to a severe economic contraction.

Trump and Mnuchin celebrated a better-than-expected May jobs report at a White House news conference last week, but substantial uncertainty remains about the economic recovery. Robert Redfield, the director of the Centers for Disease Control and Prevention, has warned of a devastating second wave that would coincide with the flu season and strain the nation's health-care system.

On Thursday, Kudlow maintained a consistently optimistic view of the economy, touting business reopenings as well as rebounding demand for automobiles and housing.

"I do think Mr. Powell could lighten up a little when he has these press offerings. You know, a smile now and then, a little bit of optimism, OK," Kudlow told Fox News. "I'll talk with him and we'll have some media training at some point."