White House economic adviser Larry Kudlow rejects criticism that the U.S. economy is only growing because of a “sugar high” from the Trump administration’s tax reform.
He predicted that President Donald Trump’s “pro-growth policies on taxes and regulation” will continue to stoke growth far into the future.
Some experts have recently contended that the economy is losing steam as the stimulus from last year’s $1.5 trillion tax cut package fades, Reuters explained. Activity is also being crimped by a trade war between the United States and China as well as by last year’s surge in the dollar and softening global economic growth, which are hurting exports.
“If you are going to play that game, the sugar high one year, let's just get the facts right,” the veteran financial guru and former Ronald Reagan adviser recently told CSPAN.
“It is not one year, it is a whole bunch of years going well out to to 2024, 2025 and so on. Why should it end?” asked Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
“We will have a soft first-quarter, we always do” when there are harsh seasonal weather factors, Kudlow said.
“I think you will see it picked up very nicely in Q2, 3 and 4. We are already seeing a nice move up in the stock market and I am very pleased the Federal Reserve is on hold” for any rate hikes, Kudlow said.
“Markets are giving you a signal. The economy is giving you a signal,” of expectations of sustained higher growth, Kudlow said.
“Money is coming in from all over the world. The dollar is strong because we are working and they are not,” he said of rival global economies. “And everyone wants to invest in the hottest economy because of the change in our laws.”
To be sure, U.S. manufacturing output fell for a second straight month in February and factory activity in New York state hit nearly a two-year low this month in data released Friday, offering further evidence of a sharp slowdown in economic growth early in the first quarter.
The reports on Friday extended the streak of weak data and underscored the Federal Reserve’s “patient” stance towards further interest rate increases this year. Fed officials are scheduled to meet next Tuesday and Wednesday to assess the economy and deliberate on the future course of monetary policy, Reuters reported.
The U.S. central bank raised rates four times last year.
“The economy is spinning its wheels and not gaining any traction yet in this soft patch produced by trade wars and stock market turbulence and the government shutdown,” said Chris Rupkey, chief economist at MUFG in New York.
“Thank God Fed officials were smart enough to take their foot off the rate hikes accelerator.”
The Fed said manufacturing production dropped 0.4 percent last month, held down by declines in the output of motor vehicles, machinery and furniture. Data for January was revised up to show output at factories falling 0.5 percent instead of slumping 0.9 percent as previously reported.
© 2023 Newsmax Finance. All rights reserved.