Top White House economic adviser Larry Kudlow hailed the major economic gains — including significant wage gains for low-income workers — made under President Trump, while suggesting that a pair of trade deals signed last week could boost GDP growth in the U.S. to 3 percent in 2020.
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“The great part about this to me — I’ve been around a while — is when you look inside, look under the hood, in this growth spurt, with 3.5 percent unemployment and virtually no inflation, which itself is a remarkable development, it is the American middle class, it is the American blue-collar, middle class, they have the fastest wage growth,” Kudlow said at the World Economic Forum in Davos, Switzerland on Wednesday.
Pay for the bottom 25 percent of wage earners, who account for 82 percent of the population, rose 4.5 percent in November from the year-ago period, according to recent data published by the Federal Reserve Bank of Atlanta. That’s the highest since July 2008. Wages for top earners, meanwhile, rose just 2.9 percent that month.
Overall, wages have accelerated this year by an average of 3.6 percent, as unemployment has held steady at 3.5 percent, a half-century low. For employers, low employment means fewer people are looking for a job, limiting the supply of available employees and increasing competition to get the best workers.
According to data from the Bureau of Labor Statistics, the ratio of unemployed people to job openings is less than 1-to-1, compared to a decade ago, when it was 6-to-1.
“The president’s trade deals have inspired a lot of confidence among large and small businesses, and I think it’s going to add at least half a point to GDP this year,” Kudlow said. “I think we’re going to be moving into the 3 percent zone.”
Last week, Trump inked a partial trade deal with China, easing nearly two years of tensions that have rattled global financial markets and contributed to a worldwide growth slowdown. One day later, the Senate approved the United States-Mexico-Canada agreement in an overwhelming 80-10 vote.
Kudlow also shed light on how Trump’s reelection campaign intends to counter a key theme — that despite a record-long economic expansion, the gap between the haves and have-nots is widening — among Democratic presidential candidates who are hoping to unseat him come November (Progressive Sens. Bernie Sanders and Elizabeth Warren are campaigning heavily on proposals to overhaul the economic system).
“In the stock-market rally, I know it’s commonplace to say it only helps a few rich people,” Kudlow said. “That is just not true.”
For instance, Kudlow said that more than half of the households in the U.S. own shares through either a 401(k) or an IRA, an individual retirement account.
“You look at the numbers, the bottom 50 percent has had a 47 percent increase in their net wealth between home prices and share prices,” he said. “And that is a booster rocket to this economy. It not only gives them confidence, it gives them some serious spending power.”