Martin Wolf, chief economics commentator of the Financial Times, contends that President Donald Trump has been lucky with the robust growth in the U.S. economy.
Wolf also argues in an article for FT.com that the president is taking credit for the continuation of a post-crisis recovery begun under President Barack Obama.
Wolf said at the Davos World Economic Forum, Trump intended to assert that “after years of stagnation, the United States is once again experiencing strong economic growth” and that the United States is “open for business” once again.
"It is true that the U.S. economy is strong; it is not true that this follows years of stagnation," Wolf said.
"Between the second quarter of 2009 and the end of 2016, the U.S. economy grew at a compound annual rate of 2.2 percent. Over the past four quarters, it grew by 2.5 percent. That is not a significant change," Wolf explained.
"The unemployment rate has indeed fallen under Mr. Trump, from 4.7 percent in December 2016 to 4.1 percent in December 2017, a very low rate by historical standards. But this is a continuation of the downward trend since 2010. If anybody deserves the credit, it is the Federal Reserve, for policies too often condemned by the Republicans," Wolf said.
Wolf also cited that "Trump is particularly enthusiastic about stocks, claiming that the market is 'smashing one record after another" in recent speeches and presidential tweets.
"This is not wrong. The rise of the market in the last year is quite remarkable, given how high it already was. But this should be a worry, not a boast. Mr Trump may soon come to regret lauding a high stock market. It is at no president’s beck and call," Wolf said.
Wolf also isn't very optimistic on what the sweeping tax reform will mean for the economy in the long run.
"An argument for hoping that better times will soon be here is the huge tax cut for business. It is quite unlikely, however, that this will unleash a flood of investment and higher underlying economic growth. A more plausible view is that it will mainly increase stock prices, wealth inequality and the speed of the competitive race to the bottom on taxation of capital," Wolf predicted.
"Mr. Trump is taking credit for the continuation of a post-crisis recovery begun under his predecessor. This is no 'brand new' economy. He has been lucky. Provided the stock market does not blow up, he may stay lucky. Yet the question is how a lucky Mr. Trump will behave. Will a man who feels he is on a winning streak be more demanding or more accommodating?"
For his part, Trump has taken to Twitter to tout the economy.
"Our economy is better than it has been in many decades. Businesses are coming back to America like never before. Chrysler, as an example, is leaving Mexico and coming back to the USA. Unemployment is nearing record lows. We are on the right track!" he tweeted Sunday.
Other economic gurus are much more optimistic about the economy's future.
Larry Kudlow, the Reagan administration economist who also advised the Trump campaign, praised President Trump for his speech and other remarks last week in Davos, Switzerland.
The president brought his “America First” message to the annual World Economic Forum meeting, while also showing a willingness to co-operate with other countries. Davos has the reputation for bringing together the business and political elite to promote a globalist agenda that’s contrary to Trump’s campaign message of protecting U.S. workers from the ravages of unfair trade.
“It was very wise to go into the lion’s den,” Kudlow said on cable channel CNBC. “I liked his tone, which was cooperative, and I liked his substance, which was: ‘America’s open for business’.”
(Newsmax wire services contributed to this report).
© 2023 Newsmax Finance. All rights reserved.