White House economic adviser Larry Kudlow predicts that 2020 “will be a very, very strong economic year” as the jobs market only stands to get stronger in the wake of Friday’s China-U.S. trade deal.
“I think it will be pro-growth. I think it will help business confidence and business investment,” Kudlow told CNBC.
Kudlow spoke hours after the U.S. and China cooled their trade war on Friday, announcing a “phase one” agreement that reduces some U.S. tariffs in exchange for increased Chinese purchases of American farm products and other goods.
Beijing has agreed to buy $32 billion in additional agricultural goods over the next two years, U.S. officials said, from a baseline of $24 billion purchased in 2017, before the trade war started. China would also ramp-up purchases of U.S. manufactured goods, energy, and services, Reuters explained.
The U.S. would suspend tariffs on Chinese goods due to go into effect on Sunday, and reduce others, officials said. A deal is expected to be signed the first week of January in Washington by principal negotiators.
Meanwhile, the veteran financial guru and former Ronald Reagan adviser speculated that the China trade deal could boost the U.S. gross domestic product (GDP) “probably half a point, it's almost impossible to say.”
“I think the fourth quarter will surprise everybody with strength,” said Kudlow, the head of the National Economic Council that advises President Donald Trump.
“The way the stock market is going, it looks like 2020 will be a very, very strong economic year,” said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.
“You've already seen the jobs and the wages and the production workers doing better than their managers and take home pay is up about 5,000 bucks. We're in very good shape,” said Kudlow, who served as the Trump campaign's senior economic adviser.
The Atlanta Fed GDP Now maintained its fourth-quarter GDP growth estimate at 2%.
The economy grew at a 2.1% rate in the third quarter. The economy grew at a 2.0% pace in the April-June period.
However, another regional central bank wasn't as optimistic. The economy is expected to expand by 0.7% in the last quarter of the year, compared to the previous week's estimate of 0.6%, the Federal Reserve Bank of New York's latest Nowcasting Report showed on Friday.
However, U.S. retail sales increased less than expected in November as Americans cut back on discretionary spending despite a strong labor market, raising fears the economy was slowing a bit faster than anticipated in the fourth quarter.
The report from the Commerce Department on Friday bucked a recent raft of fairly upbeat data on the labor market, housing, trade and manufacturing that had suggested the economy was growing at a moderate speed in spite of headwinds from trade tensions and slowing global growth.
The Federal Reserve on Wednesday kept interest rates steady and signaled that borrowing costs were likely to remain unchanged at least through next year amid expectations the economy would continue to grow modestly and the unemployment rate remain low.
“Just as the Fed was in the middle of a victory dance, convinced they have returned the economy to a position of strength after just three rate cuts, the consumer waves a red flag,” said Lindsey Piegza, chief economist at Stifel in Chicago. “Any signs the consumer is waning could have sizeable negative consequences for growth at year-end and into next year,” Piegza told Reuters.
This report uses material from Reuters.
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