Record 7. 4 percent between july and september. It has recovered two thirds of the ground it lost during the first half of the year during the pandemic, but many economists remain wary because the figure comes as the country is still entering this time of rising coronavirus cases and the economy has not entirely healed. So lets begin with these new numbers. Do you acknowledge these record gains follow record losses . Larry of course i do. The pandemic contraction because of the shut ins last spring generated a very heavy economic toll. Very heavy. You have a 33 increase, annualized increase in the third quarter. Thats a record. I want to go underneath the hood here because i think this is a selfsustaining recovery. The numbers are gargantuan. I am going to read them off. You have Consumer Spending up 41 , housing up 59 , Business Investment in equipment up 70 and automobile production up almost 1200 . My take is this this is selfsustaining. It is going to spill over into the Current Quarter and next year, policies permitting. But the one missing link and a lot of people have not talked about this, you are going to get a big inventory rebuild. I dont mean to go into the grass and weeds on business and economics, but that is the way the economy works. You have rising demands liberated by the reopening of the economy and now inventories have to be rebuilt to meet those those demands. That means you are going to have several quarters, maybe a good year of more production, more manufacturing, more jobs, more wage increases. Thats the way its going to work. Robert you talk about your positive outlook and say this is selfsustaining. But i have to contrast your comments just now with what dr. Fauci said on cnbc on wednesday night. He said its going to get worse, in terms of the pandemic, we are going into a colder season, weve got to do something different. We cant just let this happen. He has a pretty bleak view about how this will unfold with the pandemic and the pandemic is connected to the economy, is it not . Larry yes, of course. But i would also say that dr. Fauci in our last virus Task Force Meeting this is thursday, i think it was monday or tuesday, he said we mustnt and wont advocate shutting down the economy. Thats a big difference from what happened last winter. And i think we are all agreed that another shut down would carry cost and consequences way beyond the problem. We dont want the cure to be worse than the problem. That has been the president s position, but the experts are saying the same thing. Instead, let me offer a better alternative. Im not denying the viruses virus is popping up, particularly in the Northern Midwest for planes states and i dont deny theres a lot of hardship from it. But having said that, we know how to protect the vulnerable. Weve got more equipment and testing than ever before. More experience. We are doing a million tests a day right now. We have therapies coming online, and the principal mitigation efforts remain the same. Testing, masking, distancing, good old fashion hygiene, washing your hands. And i would add to this that birx and others in this meeting discussed not so much big crowds, but people coming home for the holidays or whatnot. Im not saying they all have to wear masks all the time, but the distancing issue is probably important and people have to be on guard for that. Let me finish this thought i dont see another shut down. That is not a mitigation technique we favor. We cannot dictate to every state. They have ultimate authority, but that is our view. I know whats going on in europe and im not going to tell them how to live either but i just dont think another shut down works. And that means the outlook for the economy is going to be better because we have proven these kinds of mitigation guidelines, when followed, do contain the virus. Thats an important point. I do not think that a leads to b in that logic. Thats all im trying to get across. I dont think youre going to have a shut down and i do think this is going to continue to recover and so will wages. Robert if you are not going to have a shut down in the coming weeks or months, does that mean your view is this administration has the virus under control . Larry i dont like the term control. I dont know what that means. Contained is a word i do like. You go from mitigation to containment and thats our strategy. Ultimately, the vaccine is going to be so important and probably thats the ultimate fix. Again, at the virus task force fauci and others suggested late december, early in the new year for the vaccine. No one knows. Im not the scientist. Im just telling you what our Health Experts are saying. In the meantime, in addition to the mitigation, i think the new therapies coming online, regeneron and so forth, are very important and will be used more wisely and i want to add to that insofar as the vaccine is concerned, when it is approved by the outside independent counseling and reviewers, we have already put together a military and fema plan to distribute vaccines in large sevenfigure numbers across the country and i might add it will be done for free. Anybody who is not covered by insurance, anyone with prior conditions and so forth, we will just give it to you for free. Weve got the distribution and we are waiting for the goahead. That is probably the ultimate solution. But again, coming back to the economy and todays gdp and my suggestion we can get a selfsustaining recovery, we are not going to shut down. But i will tell you what else we are not going to raise taxes, we are not going to reregulate, oil,e are not going to end gas and power. Robert the stock market has had a rough stretch. It has slid in recent days. Is President Trump concerned about that and are there any plans policy wise to address the stock market in the coming days or weeks . Larry not specifically, bob. I spoke to the president last evening about the economic releases. We know the market is correcting. We know the market is fearful about the spread of the pandemic in europe once again. I get that, and corrections are probably appropriate. Im not going to secondguess the market. But i do think our view is the policies that generated tremendous prosperity prepandemic, i. E. Lower tax rates, rollback of unnecessary regulations, and independent energy sector, including renewals and better trade policies, that stuff which gave us a 3. 5 Unemployment Rate and the highest Living Standards in 20 years, gave the biggest benefits to middle and lower income classes and minority groups, and those are facts, those are facts from Census Bureau and the bls, those policies need to be continued. That is his intent, if he is reelected, to continue those policies and build on them. We are formulating right now a middleclass tax cut, we are formulating on ensuring tax incentives to bring companies and supply chains back home to the usa. We are looking at additional u. S. Trade deals that will have incentives for a strong economic recovery. I say dont change horses in midstream. Stay with the guys and policies that brought you to this prosperity dance and the other team disagrees. I understand that. Were going to have an election on tuesday and at some future point we will know the outcome. That is our point of view. We are not aiming at stocks in particularly, but in general, after this big jump in gdp, we should be growing at 5 or 6 next year and then 3 plus in the following years. Thats the normal prosperity cycle. We did it once, we can do it again. Robert you say the stock market is in a correction. How does that play out the rest of this fall . Larry you are asking for a kudlow investment strategy. Are you sure you want to hear that . [laughter] robert you are the president s top economic adviser. You said it is a correction. How far is it going to correct . Larry i dont know, nobody ever notice and im not going to ws and im not going to hazard a guess. I do think as the economy recovers under this scenario, and i know it is an optimistic scenario and i am an optimist, but the facts bared out. The stock market will take care of itself. I believe in buying stocks for the long run and i dont believe in shortterm trading. I think most of the 100 million plus investors around the country with their 401 k s and their iras and so forth agree with me. Stocks for the long run. The economy cannot only get back to normal, it can surpass normalcy. We are in a great prosperity cycle prepandemic and i believe it can be rebuilt. Robert what is the plan for the millions of americans who have not recovered their jobs under jobs, who are not feeling the celebration today . Larry thats important. About half the workforce that has been unemployed has gone back to work but that still leaves half. Its not good enough by a longshot. Theyre still too much hardship. By the way, thats one of the reasons we wanted a narrower, targeted assistance package. You know, look i can give you , two items that were always top of our list. One of them was unemployment assistance because having not gotten the deal this summer and fall or so far, President Trump took the lead, generated an executive order to provide a 100federal plus up with from the states but that is , going to run out. We need a congressional appropriation to ensure those people will remain covered by a federal program during this difficult time. The second point we wanted was to aid Small Businesses. Here this the ppp, payroll protection plan, which probably saved 50 million jobs and you can see in the numbers come numbers, we have had a good increase in jobs. 14 million civilian employment temporary layoffs come about half of them have gone back to work. But the ppp had 135 billion unspent. Unspent. The congressional appropriations to repurpose those moneys into a new cycle i never understood that. We can debate the ideological and political differences. We can relitigate that. We have an election for that. It in terms of economic assistance to help the very group you just mentioned, the unemployed, which i agree is way too high and we must deal with that, while the economy is recovering, we need to help them and we should have had a deal. We should have had standalone bills or something. We should have had a deal to help them and the Small Businesses that are most vulnerable and i think its a mystery why we could not have reached a compromise agreement. Secretary mnuchin calls me up at 7 30 this morning. Speaker pelosi sends a letter he talks to her every day for the last three or four months and this letter is mysteriously published in politico before the secretary himself even gets a copy. That to us says robert why doesnt President Trump call up Speaker Pelosi . Why doesnt President Trump just pick up the phone and call himself . Larry because secretary mnuchin is a terrific negotiator and that process was working, but unfortunately, it did not reach the outcome. All the issues on the table, but it became all or nothing. Again, this morning with the business about the letter and so forth, the secretary so frustrated on the phone, we just think she is stringing us along. Im sorry to say that, its not personal, but i dont think she wants a deal or compromise preelection. Perhaps so close to the election. Robert thats why i asked you about having the president call you say you respected the process but youve been griping about the letter from Speaker Pelosi in previous interviews today. Clearly, the process has broken down. Whos going to put it back together . If not secretary mnuchin, who brings this back. Larry we are going to have an election in a couple of days. That is the line right now. Hopefully we can go back to work after the election. Of alli really believe the issues out there in a potential package, the unemployment assistance and Small Business assistance, and let me add, we had 105 billion reopenings,k12 covid assistance, machinery. Those of the most important areas. Maybe be at airlines. At those of areas. We should have done this last summer. Now the election looms and we will wait to see. Let us say it is a lame duck. Leader mcconnell on the same page as you and President Trump . Is he going to handcuff you during the lameduck on any stimulus deal . Larry leader mcconnell, mitch mcconnell, i have known for a long time. He is a very wise man. He told us during this process that if there was a genuine bipartisan bill, and many of his asks are part of that bill, that he would be for it. But we did not get those asks. One of them, and you know as well. Of of them is the issue Small Business liability insurance. We should have built in safeguards to help reopen the sector and rehire workers. Why did we why didnt we do that . Gross negligence is one thing. We dont want to get caught up in trial lawyers and lawsuits and so forth. This wouldnot help the economy tremendously. The republicans did not want to spend a lot of money that was unnecessary to bail out badly managed states and localities. President trump agreed with that point of view. That could be done later. He did not have to have an all or nothing package here. I have said my piece. I believe i have reflected the secretarys views and the president s views. We have an election and we will hopefully go to work right after the election. Your point that unemployment is an issue. We have come back 50 and the rest of the economy as come back practically over 90 from pandemic lows. Protect theto unemployed while the economy reactivates and gets them back to work. Lets get it done and help Small Businesses. Robert i keep hearing from administration from blue state bailouts. Conservative for years. What about subsidies for farmers . Do you support that . Why are they getting so many subsidies . Larry believe it or not, farm subsidies hashe , risen substantially under President Trump. Farmers got some added help from us, because the china trade deal took a long time to pan out, there were a lot of disruptions to the marketplace and their exports suffered. We have the strongest, best run technologically farm sector in the world. We decided to help them along the way. Secondly, the pandemic. We have given a lot of assistance to a lot of sectors. Those are not necessarily permanent subsidies. I do not want to forecast along these emergencies are going to last, but, yes, we came to their assistance. Here is the good news. With all the problems with china, there are very important problems here for which they will be held accountable. Notwithstanding, we are engaged on trade and they are buying commodities. That will help our farm sector quite a bit. I thought the farm subsidies on a temporary basis were justified. That is a different question than 1020 years of badly managed cities and states. Robert any tariffs coming on china for its handling of the coronavirus . No, not immediately. Robert so they are on the table . Larry china will be held accountable for the lack of transparency and the possible instigation of the spread of the virus. That is all being looked into and discuss. We are very unhappy with china, not only on the china virus issue, but also on the hong kong issue and the priming the depriving of the economy of its democratic and free rights. We oppose their human rights. The liberals are joining us on all this stuff, if you ask me. We need to be very tough on china and their military adventurism in the south china sea. We are engaged on trade. Robert lighthizer, he and i have spoken many times in the last few weeks. He has also told the president of china is keeping a steel so far on the commodity purchases. Also, ambassador lighthizer is optimistic that changes will be made on the issue of an property theft. We will be thankful for some progress there. Robert it is clear this administration wants to keep it straight to with china going, but you say you want to hold them accountable. How do you hold them accountable not tariffs . Y if larry im going to leave that to postelection discussions. We have a number of options. We have already taken a number of actions on things like export controls and protect consumer personal information, corporate information, government information. Regarding new measures and so forth, i dont want to get ahead of the president. All that, there are many things under discussion internally. We will see. Robert those would be economic penalties . Larry perhaps. Robert any details, larry . Not at the moment, bob, sorry. This is deep National Security stuff. I am not going to reveal that now. These decisions will be up to the president , of course, and the National Security council. We are working on a number of options. The china is very much undermines. Secretary pompeo has been a great leader on this. More will be forthcoming, but not at the moment. Robert really appreciate your time this afternoon, larry kudlow. Thank you. Larry thank you, appreciate it. Thank you all for joining us robertthank you all for joining us today for another Washington Post conversation. Dont miss our election daily show every day monday through friday at 1 00 p. M. Eastern now through next week, to go over the latest headlines, talk to reporters, then on newsmakers on friday, i will be joined by peter navarro, who works along larry kudlow in the white house, representative, lisa blunt rochester, at 1 00 p. M. Eastern on friday right here at Washington Post live and at 3 p. M. , my colleague robin given will talk to will. I. Am one of the legendary , musicians over the last 20 years who was very popular when i was in high school and college. He will be here talking to robin. Make sure to stop by for those conversations. For now, inks for joining us. We will see you soon. With Amy Coney Barrett sworn in as the newest justice, the Supreme Court with nine justices heres and nine oral arguments. Listen live at cspan. Org supremecourt. The justices your arguments versus mississippi, gordon versus the United States and fulton versus city of philadelphia. Listen to oral arguments live or ondemand at cspan. Org supr emecourt. The white house did not release a weekly address this weekend. Representative jason crow of colorado delivered the weekly address talking about the importance of voting. Crow hi, i have jason crow, husband, dad, former paratrooper and army ranger and the congressman from colorados six district. In america, nothing is more sacred than the right to vote. With the first tuesday in november just days away, americans are voting in record numbers. More than 75 milli h