Austan Goolsbee on Jobs: I Hope Trump Succeeds in Extending the Lead Obama Created

Former Chairman of the Council of Economic Advisors and University of Chicago Booth School of Business’ Austan Goolsbee discussed the potential U.S. market and economic outlook under President Trump.

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Goolsbee first responded to whether the market’s rally since the presidential election in November is due to Trump.

“I think it definitely has some to do with Donald Trump,” Goolsbee told the FOX Business Network’s Stuart Varney.

Goolsbee then pointed to a correlation between Trump’s comments and the rising value of financials.

“I would point out only that if you look at the rise in the Dow for example, some 20% or so is just from the rise of Goldman Sachs’ (NYSE:GS) value and that if you look at financials broadly they account for something like a third of that increase.  So I don’t think it’s a surprise that when Donald Trump gets up and says, ‘I’m going to give you free benefits and I’m going to get rid of the rules, that I’m going to unshackle banks so that they can make more money again’ that they’re value would go up.”

Varney questioned whether the key elements of Trump’s economic agenda such as the repeal and replacement of Obamacare, individual and corporate tax cuts, infrastructure spending will lead to the economic growth the administration is predicting.?

“I don’t think that if we do those things we’ll be on the path to growth,” Goolsbee responded.

According to Goolsbee, a potential border adjustment tax could negate the economic benefits of a corporate tax cut.

“If you look at the tax cut, as you know, we’re now in this situation with the border adjustment that they’re gonna pay for a large corporate tax cut with a large increase in taxes on consumers.  If you combine a tax cut with a tax increase I don’t think that there’s nearly as big of an impact on growth as you might hope for.”

Goolsbee was hopeful that Trump will continue the strong path of post-recession job creation that began under the Obama administration.

“I think that the employment record of the last seven years post-recession has been actually fairly strong, more than two million a year. We’re going to see whether the Trump administration can create jobs at that kind of speed. I hope they can, I hope they succeed, Stuart, in extending the lead that Barack Obama created.”

On the other hand, Goolsbee raised concerns that disagreements within the Republican Party could get in the way of Trump’s economic plan.

“I think that to your earlier statement, Stuart, that the Republicans have got to find some unity and pass these things, I think you’re right.  There is a big risk, the first six months is when presidents do things and if the Republicans just kind of fiddle around and say, ‘no, no, but I don’t like that one,’ they’re going to blow the window and then I think Trump is not going to be able to pass his agenda.”