Friday, Larry Kudlow, director of President Trump’s National Economic Council, said that the economy’s addition of 312,000 jobs last month means “we are in a boom” and there is no recession on the horizon.
“There is way too much pessimism out there, probably because of the stock market correction,” Mr. Kudlow said. “But sometimes stocks depart from the economy.”
He added: “We’re hitting on all cylinders. The Trump Plan is working: Low tax rates for large and small businesses and individuals, the biggest regulatory rollback in decades, and sponsorship of American energy dominance.
“This is working. It has led to great confidence, particularly among small business owners.”
Mr. Kudlow’s take on small-business owners’ bullishness is borne out in last month’s NFIB small-business survey, which found small-business confidence at a historically high level of 104.8.
“I’m just saying the policies are working,” added President Trump’s Top economist. “It’s supply side driven growth — that’s so important.”
Paul Ashworth, chief U.S. economist at Capital Economics, echoed Kudlow’s reaction.
“The far bigger than expected 312,000 jump in non-farm payrolls in December would seem to make a mockery of market fears of an impending recession,” he stated.
Wage growth also outpaced economists’ expectations in Friday’s Bureau of Labor Statistics report, increasing by 3.2% over December 2017. Kudlow hailed that wage growth as a major reason 419,000 new workers entered the workforce.
The influx of new workers increased the labor participation rate to 63.1%, up 0.4 percentage points from December 2017. The expanded pool of workers caused the unemployment rate to edge up slightly to 3.9 percent.
“Despite the pessimism that’s out there, you’ve got hundreds of thousands of people re-entering the workforce for the 1st time in years,” Mr. Kudlow said. “That’s a function of higher wages, and it’s a function of better confidence.
Economists surveyed by Dow Jones had anticipated that the economy would add just 176,000 jobs. The jobs growth came despite stock market woes and the Fed’s move to hike borrowing costs 4X last year alone.
The December NFPs surge gave equity markets a big shot of adrenaline. The DJIA was up intra- day by over 800 pts.
Mr. Kudlow said he sees no visible indication of inflation rearing its head in the US economy, and reiterated his confidence that the “Trump Bump” economic expansion is genuine rather than a temporary high stemming from reduced taxes.
“You’ve got more people working and succeeding — it is not inflationary,” Kudlow says. “The real sugar high was Obama’s stimulus package, which didn’t work. This is not a sugar high, these are new incentives to work, save, and invest.”
Mr. Kudlow characterized the expansion as “a supply-side economic recovery.”
“In other words,” he says, “we are investing in producing and that leads to jobs and incomes and family spending. It’s a big difference from what my Keynesian friends believe in.”
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