Tags: kudlow | economy | can sustain growth | 4.1 percent

Kudlow: 4.1 Percent Economic Growth Rate Will Be 'Sustainable'

By    |   Sunday, 29 July 2018 12:19 PM

The 4.1 growth rate announced last week is sustainable, National Economic Council Director Larry Kudlow said Sunday, disagreeing with economists that say the growth is only temporary and could have come because of fear of how President Donald Trump's tariffs will affect raw materials and finished goods worldwide.

"I think the president deserves a victory lap," Kudlow told CNN's "State of the Union" host Jake Tapper. "Policies matter a lot. Low tax rates, rolling back regulations, opening up energy, for example, trade reform which I think is already paying off with respect to the EU agreement we did last week."

In addition, the fundamentals of the economy look "really good," said Kudlow, pointing out that business investment spending is "really booming.

"That's a productivity creator, that's a job creator, that's a wage creator for ordinary Main Street folks," said Kudlow. "The saving rate was revised higher by $500 billion. That gives consumers plenty of ammunition."

Trump has had five strong quarters while in office, added Kudlow, and there is no reason why the growth can't be run on for several quarters more.

"Rock bottom inventories and a capital goods investment boom, that's are strong factors," said Kudlow.

Last week, the Office of Management and Budget said the nation's deficit will reach $1 trillion in 2019, or $101 billion more than had been previously projected, noted Tapper. However, Kudlow said the tax cuts are raising the national deficit, but he figures it will take a year, or maybe 18 months, to turn around lower revenue.

Kudlow added that according to numbers he's seen, he thinks by the end of fiscal year 2019, the nation's corporate tax cut will be paid for, and by 2020, "it will be more than paid for."

"Of course, we inherited a tough deficit situation," Kudlow said. "Any time you have slow growth, the prior administration had a very slow growth period. That really damages the budget deficit."

The Obama administration had been coming off the recession of 2008, he conceded, but it shouldn't have taken eight years.

"That was the problem. They never got the snap-back we should have gotten," said Kudlow. "I don't want to waste time on those policies. You have a new sheriff in town."

The president also inherited a "completely broken" world trading system, said Kudlow, and not only with China.

"He's trying to fix it," said Kudlow. "Other U.S. presidents in both political parties have never pushed the way he's pushing. He believes, and I agree, if we can work these things out and improve the trading system, it will be to the benefit of the United States economy, our exports, our farmers, our industry and, by the way, will probably help the rest of the world."

He said he also agrees with a series of tariffs Trump has enacted, particularly on China, which free traders agree has not played by the rules.

"The trading system is broken largely because of them," Kudlow said. "I hope we get to our EU trade deal. The president has adopted a view with which I completely agree.
He's a free trader, and he wants to have no tariffs."

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The 4.1 growth rate announced last week is sustainable, National Economic Council Director Larry Kudlow said Sunday, disagreeing with economists that say the growth is only temporary and could have come because of fear of how President Donald Trump's tariffs will affect raw...
kudlow, economy, can sustain growth, 4.1 percent
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2018-19-29
Sunday, 29 July 2018 12:19 PM
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