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Trump Adviser Hassett: US to Defy Predictions With 3 Percent Growth

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By    |   Tuesday, 23 April 2019 09:24 AM

White House economic adviser Kevin Hassett predicts that the economy will continue to grow at a robust pace, hitting 3 percent.

“The first quarter is usually a little bit low. I think there’s almost more upside than downside risk going forward on the economy,” said Hassett, chairman of the Council of Economic Advisers, told CNBC.

“Our internal numbers at CEA got up to around 3% for the first quarter last week with some of the good news on retail sales,” he said.

“It’s an uncertain science. There’s probably about a 0.5% margin for error. And we’re just a smidgen under 3 right now,” Hassett said in a “Squawk Box” interview. “That’s a very different signal than people were expecting in early January.”

Growth forecasts for the first quarter are between a 1.5 percent and 2.3 percent annualized rate. The economy grew at a moderate 2.2 percent rate in the fourth quarter after expanding at a brisk 3.4 percent pace in the July-September period, Reuters reported.

The Trump White House has used 3% growth as a yardstick for success of the president’s economic agenda, which included tax cuts and business deregulation, CNBC.com explained.

However, U.S. manufacturing output was unchanged in March after two straight monthly declines, resulting in the first quarterly drop in production since Trump was elected.

The weakness in manufacturing reported by the Federal Reserve last week was in tandem with a moderation in the broader economy, and is despite the White House’s “America First” policies, including trade tariffs aimed at protecting domestic factories from what Trump says in unfair foreign competition.

Soft manufacturing and slowing economic growth reflect the ebbing stimulus from a $1.5 trillion tax cut package and supply chain disruptions caused by Washington’s trade war with China.

“Manufacturing production has pivoted to the downside in the first quarter of the year, showing the revival in factories and output is sputtering for the first time since the Trump economics team took office,” said Chris Rupkey, chief economist at MUFG in New York. “The trade war and America First policies have not brought factories back home yet.”

For his part, Trump has said that actions by the U.S. Federal Reserve have nicked U.S. economic growth and stock market gains by perhaps 30 percent, and that it should begin pumping money into the economy as it did during the 2007-2009 recession.

Trump’s latest broadside against the central bank, recently delivered by his tweets on Twitter and without citing any evidence, came as European Central Bank head Mario Draghi and other international officials worried that a Fed politicized by potential Trump nominees would rattle a dollar-based global system, Reuters said.

“If the Fed had done its job properly, which it has not, the Stock Market would have been up 5000 to 10,000 additional points, and GDP would have been well over 4 percent instead of 3 percent...with almost no inflation,” Trump said.

“Quantitative tightening was a killer, should have done the exact opposite,” he said, referring to the Fed’s monthly withdrawal last year of up to $50 billion of the bonds it acquired during the worst economic downturn since the 1930s Great Depression.

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Economy
White House economic adviser Kevin Hassett predicts that the economy will continue to grow at a robust pace, hitting 3 percent.
trump, hassett, economy, grow
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2019-24-23
Tuesday, 23 April 2019 09:24 AM
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