At President Trump's cabinet meeting Thursday, economic advisor Larry Kudlow commented on the state of the U.S. economy.
"By far the single biggest event, political or otherwise, this year is an economic boom that most people thought would be impossible to generate. Not a rise, not a blip -- a genuine economic boom," Kudlow said.
"Confidence is everything," he said. "The new numbers coming in -- retail sales, industrial production, low inflation, a rock-steady dollar. Trillions of dollars of capital from all over the world is coming into the United States because our economy, our investors, our workforce are crushing it right now. We are crushing it."
LARRY KUDLOW: Yes, sir. Thank you. Appreciate it. Hi, everybody.
So, look, it's fairly simple thought -- most good things are. But I'm looking at the media, and watching various TV and other outlets talk about stuff that baffles me, that's outside my lane.
Here's the key point I made to the President yesterday and I make it to you today, and I hope we all we keep making it: By far -- by far -- the single biggest event, be it political or otherwise, this year is an economic boom that most people thought would be impossible to generate. Not a rise, not a blip -- a genuine economic boom.
And everybody wrote us off, going back to the campaign, and as it was put into place last year, and now the follow through this year. And the numbers are coming in; they just keep coming in, which is one of the reasons I tried to get a hold of the President on this. I mean, we've got 3.1 percent GDP in the first half of the year; 4.1 in the second quarter. The Atlanta Fed is predicting 4.3 in the third quarter. I think it's a very realistic estimate.
Here's the point: Anybody who does political forecasting using the economy always focuses on a number -- hang with me -- real disposable income. Just think of it as after-tax pay -- "take-home pay," as Ronald Reagan used to say.
So that measure is growing at 3.1 percent the last 12 months. When we came to office, it was less than 1 percent on a 12-month basis. It has jumped. So people say only a few are benefitting. Not true. This is a measure of the entire economy. Everyone's wages and salaries, adjusted for taxes and adjusted for inflation, is growing at 3 percent. It's a tremendous number. And there's no signs that's abating.
Confidence -- confidence numbers: Large businesses, small businesses, and consumer confidence numbers are at or near record highs, and, from the latest surveys, are continuing to rise. There's no letup in the increase. And confidence is everything. Confidence is everything. And I can run down the litany -- I'm not going to take up your time. I'm just saying.
The really wonderful part of the story for me -- and, you know, I get off on this stuff, I understand that -- but it's very important for the country, Americans, the workforce. The new numbers coming in -- retail sales, industrial production, low inflation, a rock-steady dollar. Trillions of dollars of capital from all over the world is coming into the United States because our economy, our investors, our workforce are crushing it right now. We are crushing it.
And people say this is not sustainable, it's a one-quarter blip. It's just nonsense, absolute nonsense. Any business economist worth his or her salt would look at these trends and tell you we're going for a while. We have low inventories. We have rising business investment. Productivity is showing the first lift in years; the last number was 1.3 percent for the year. We haven't seen that in a long time. Businesses are investing. Capital goods is booming. This is a complete turnaround. It's like, if you give Americans some freedom to run, they will run. All right?
And presidential policy -- low tax rates, roll back regulations, open up energy, trade reforms to help the American workforce and the employers -- across the board, we're not punishing success; we're rewarding success. We're not against businesses; we are for businesses. And we have a President who, in my words, was telling folks to take a rip at the ball, and they're doing it.
And again, people may disagree with me, but I'm saying, this -- we are just in the early stages. We're in the early innings here. We never had a cap goods boom. We're now starting. And we've never seen income numbers like this -- again, after tax, after inflation.
Policies matter. I mean, America's free market economy -- ordinary people run our economy, entrepreneurs. That's the beauty of it. But policies matter. And when you change that switch, as President Trump has changed that switch, things are happening that a handful of us thought might happen, but I would not say it was widespread.
So I'll just end, sir. And I appreciate the time very much. The single biggest story this year is an economic boom that is durable and lasting, and that most people thought was impossible. And they were wrong. And you were right, sir.
TRUMP: Thank you, Larry, very much. Larry, I should end on that. This is always a mistake. (Laughter.) Could I ask you one question? China. As you know, China was, for many years -- as long as anybody up here, including the media, could remember -- China was on a one-way road to becoming the biggest economy and all of that. And we were just going to be left behind.
I'd like you to say how are we doing versus China, and how is China doing. We want them to do well, frankly. And President Xi is a friend of mine. I want them to do well. But how are we doing versus China? How is China doing?
MR. KUDLOW: You know, sir, the latest batch of numbers from China, spanning a good six months now, nine months -- their economy is just heading south. Retail sales, business -- business investment is collapsing in China, according to the numbers. Industrial production has fallen and now is plateauing at a low level. People are selling the currency; there may be some manipulation. But mostly, I think investors are moving out of China because they don't like the economy, and they're coming to the USA because they like our economy.
I'm not a China expert, although I'm boning up as fast as I can. I will just say, right now, their economy looks terrible.
TRUMP: Okay, thank you. Thank you very much, Larry.
MR. KUDLOW: Thank you, sir.