Politics

Top Economics Advisers to Trump, Obama Agree on GDP

Kevin Hassett and Austan Goolsbee concur that Friday’s economic report was good, but they differ on what's ahead

One of President Donald Trump’s top economic advisers told Fox News host Laura Ingraham Friday that the latest gross domestic product (GDP) report points to a booming economy.

But don’t just take Kevin Hassett’s word for it. Austan Goolsbee, who served as chairman of the White House Council of Economic Advisers under then-President Barack Obama, had more or less the same read on Friday’s report from the Bureau of Economic Analysis (BEA).

“There’s nothing bad about having a 4 percent GDP growth number. That’s good,” Goolsbee said on “The Ingraham Angle” Friday evening. “That’s good for America. And the president is entitled to say this was a good number. You could see he was beaming with pride.”

Hassett, who has the same job under Trump that Goolsbee had in the Obama administration, was even more effusive.

“Everything about the Trump agenda is working,” he said. “And, of course, that’s gonna drive the critics crazy.”

The report indicated that the economy grew at a 4.1 percent clip during the second quarter of 2018, up from 2.2. percent during the first three months of the year.

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Hassett said the economy is poised for sustained, brisk growth — something that has not happened since before the Great Recession of 2008, which shook the country for nearly three years.

“The fact is that we’ve said that if we cut corporate taxes, then the jobs will come home,” he said. “We’ve said that if we pursue energy dominance, then there’ll be lots of exploration and drilling. And we’ve said if we pursued better trade deals by showing that we’re tough, that we’d reduce the trade deficit.”

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Where the two economists differed was on what to expect in the future. Goolsbee noted that the good report on Friday follows a first-quarter figure that was rather mediocre.

“Just be a little careful,” he said. “There are several aspects of the GDP number today that look like they’re probably temporary.”

Trump critics have dismissed the GDP growth as a “sugar high” fueled by artificially high exports of soybeans as China stocked up in anticipation of a trade dispute with the U.S.

But Hassett said there are plenty of reasons for optimism. He noted that inventories dropped. That means that businesses will have to produce more goods during the third quarter to replenish their stocks.

Hassett acknowledged that economic growth can be susceptible to temporary “sugar highs.” He pointed to Obama’s 2009 “cash for clunkers” programs in which Americans received cash incentives to trade in older cars for new models.

The idea was to stimulate America’s ailing car industry. GDP shot up by 3.9 percent in the fourth quarter of that year. The following quarter, though, growth fell back to 1.7 percent.

This is different, Hassett said. He said the GDP report details a “capital spending boom” that will lay the foundation for future growth.

“What we see is capital spending, and capital spending increases supply,” he said. “All of those factories that are being built this quarter are gonna produce output next quarter. And that output is gonna sustain the growth.”

Goolsbee offered two warnings — wages and trade. The former Obama adviser said better growth has not yet raised the living standards of average Americans.

Related: Victory Lap for Trump as He Boasts of ‘Amazing’ GDP Number

“That’s the toughest part of the recovery, and it has been true for a long time,” he said. “It’s not like this is just the fault of the Trump administration. It’s been a long period that we haven’t had enough wage growth for just ordinary workers right in the middle of the wage distribution.”

And Goolsbee said Trump’s confrontational trade policies risk blunting recent gains. He said the administration should be rounding up America’s “natural allies” for a coordinated strategy countering China’s unfair trade practices rather than attacking them.

“If your main thing is about confronting China, don’t pick seven fights while carrying a six-shooter,” he said. “That’s the gunfighter’s credo. And that’s been our problem.”

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