White House says economy is clicking, but concedes trade battles hurt
A new White House report touts the U.S. economy as expanding faster than anticipated, even as growth has undershot the 3% to 4% target that the Trump administration has promised to deliver.
The economy added more jobs, had a lower unemployment rate and grew faster than the Congressional Budget Office report had projected back in 2016, the Council of Economic Advisers said in its annual report, released Thursday
"The overall evidence of the report as we see it is that three years into the Trump administration the U.S. economy continues to outperform pre-2016 election expectations," Tomas Philipson, acting chairman of the White House Council of Economic Advisers, said in a briefing.
When President Donald Trump proposed his $4.7 trillion federal budget just over a year ago, the fiscal plan was premised on the economy growing at least 3% a year through his presidency. That projection proved overly rosy, with Philipson acknowledging that President Trump's trade fights with China and other countries have slowed U.S. economic growth.
"Uncertainty generated by trade negotiations dampened investment," Philipson said. He declined to quantify that impact, pointing instead to a Federal Reserve study in September estimating that uncertainly over trade could have cut growth in the gross domestic product by more than 1 percentage point through early 2020.
Dubious assumptions?
Yet the 435-page report largely downplays any negative ripples from the administration's trade battles. It instead makes the case that Mr. Trump's programs have led to a "great expansion" that is helping lift more Americans.
The U.S. economy has added jobs every month since July 2009 and maintained positive economic growth, even as it slowed to 2.3% in 2019 from a 2.9% annualized growth rate the prior year.
Dean Baker, a senior economist at the left-leaning Center for Economic and Policy Research, said the administration's growth forecast is based on unrealistic assumptions. "They are projecting a huge uptick in productivity and GDP growth this year — 2.6 percent and 3.1 — for which we see zero evidence," he said in an email.
The White House economic panel also says the administration's push to cut government regulations in the U.S. will boost households by curbing how much is spent on health care and online access.
"Savings from deregulation of prescription drugs and internet access as a share of household income are eight times greater for the bottom fifth of households than for the top fifth," according to a summary of the report.
CEPR's Baker, a visiting professor at the University of Utah, noted that spending on prescription drugs in the U.S. continues to rise sharply, jumping roughly 8% in 2019.
The Associated Press contributed to this report.