The U.S. economy showed surprising strength in the first quarter of 2019, with initial estimates of GDP growth coming in at a solid 3.2 percent, and more significantly, year-over-year productivity growth hit 2.4 percent — the highest reading since 2010.
National Economic Council Director Larry Kudlow summed it up best when he said the latest economic data shows the administration is “killing it on the economy,” and President Trump’s economic approval rating has hit a new all-time high.
The U.S. economy is off to a great start this year. Here are some economic stories to look out for as we continue in Q2.
1.) Is a gas tax hike on the horizon?
I’m going to give President Trump the benefit of the doubt on this one and say ‘no.’ His lead economist, Director Kudlow, has told reporters that he is not in favor of this idea.
However, it is widely reported a gas tax hike is being considered by members of the Trump administration as they look to pay for additional infrastructure spending.
President Trump — you made this economic boom by cutting taxes, not raising them. Your supporters don’t want the gas tax raised, they want it lowered.
2.) Warren Buffet turns heel on the Democrats.
This was seriously epic. In a recent interview, famed investor Warren Buffet made the following remarks:
- “I’m a card-carrying capitalist.”
- “I don’t think the country will go into socialism in 2020 or 2040 or 2060.”
- And: “Mr. Buffett threw cold water on the idea of managing companies based on trendy ‘environmental, social and governance’ metrics.”
Warren Buffet is a longtime, outspoken member of the Democratic Party. My take on these comments? Today’s Democratic Party — one that outwardly embraces socialism and a radical left-wing social agenda — is too extreme for him. As it should be.
3.) Who will Trump nominate next to the Federal Reserve Board of Governors?
Last week, Stephen Moore withdrew his name from consideration for a seat on the Federal Reserve Board of Governors. Both Moore and Herman Cain (who previously withdrew from consideration) were unconventional picks with a long track record of advocating for a sound, stable dollar.
My hope is that President Trump does not retreat on the substance of their economic arguments just because their bids were unsuccessful.
Supply-siders want another chance at bat to confirm a real reformer to the Fed. That’s why I hope Judy Shelton is on deck.
4.) Trade tensions continue to rattle markets.
The Dow is off its all-time highs after President Trump launched a series of tweets at China in advance of upcoming trade negotiations.
Economist Dan Mitchell referred to these tweets as the worst of Trump’s presidency and correctly points out that those tariffs on China are taxes paid by Americans.
Remove trade war uncertainty from the equation and the market should take off. Earnings season was good, productivity is picking up, inflation is low, and GDP growth is strong. Let’s hope China and the U.S. can reach an agreement in their upcoming trade meeting — it’s in the best interest of both countries to do so.