President Trump’s top economic adviser said, thanks to the administration’s policies, the United States is experiencing a boom for blue-collar workers.
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“America’s working and the president’s policies with tax cuts and deregulation and opening energy and reducing trade barriers and really, for the first time ... at least since the 90s, if not longer ... the middle and the lower end of the wage earners are outpacing their bosses in terms of growth,” he told FOX Business' Gerry Baker at the World Economic Forum in Davos, Switzerland. “And we think that’s terrific.”
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.
Kudlow credited supply-side economics, favored by his mentor President Ronald Reagan, for the good news.
"I mean, as an old Reagan guy, Reagan used to talk about take-home pay, and take-home pay is roaring right now in the U.S., and it’s right in that middle- to lower-middle zone, growing by some $5,000 per household," Kudlow explained.
Kudlow said that is "a big deal.”
Kudlow pointed to the fact 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 in Davos on Wednesday.
Kudlow called that "a booster rocket to this economy" while speaking in Davos.
“Three-and-a-half percent unemployment rate with no inflation just shows you that liberalizing the economy can work and create stronger growth,” he later explained to Baker. “Hopefully other countries will make similar moves.”
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.
On Thursday, Kudlow told FOX Business' Lou Dobbs the "cognitive dissonance" in the country inspired Trump's speech in Davos.
"I'm glad that in this speech, we put a lot of facts, and the president, you know, loves to deal with facts and lay it out on growth, on unemployment, on the blue-collar wage boom, on the stock market, which is a sign of great businesses, consumer confidence and a better economy to come on the trade deals with China, USMCA, Japan and Korea," Kudlow said on "Lou Dobbs Tonight."
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.
But when questioned why the Gross Domestic Product hasn’t boomed as much as the Trump team had advertised, Kudlow put the blame squarely on the Federal Reserve’s interest rate policies.
“We had the growth going up to near 4 percent in 2018,” he mentioned. "Then, we had a kind of monetary restraint program that I still don’t really understand."
Kudlow hopes the Fed gets "bolder" with its shifting financial direction to help the GDP, and he would like to see another tax cut on top of the one passed in 2017, calling it a priority for 2020. However, he’s not counting on one anytime soon.
“Now, we don’t expect any legislation,” he said. “As I’ve said, 'Tax Cut 2.0,' the president commissioned me to come up with a plan that will enhance middle-class tax relief and middle-class wage increases."