President Donald Trump on Wednesday said that the U.S. economy’s GDP growth would have been closer to 4 percent if it weren’t for the lingering effect of Federal Reserve rate hikes.
“That was a big blip that should not have taken place. It should not have happened. But it’s one of those things. But we had Boeing. We had the big strike with General Motors. We had things happen that are very unusual to happen,” Trump told CNBC’s Joe Kernen in an interview from the World Economic Forum in Davos, Switzerland.
The president also suggested that the stock market would be even higher than its already record-setting highs if the Fed hadn’t raised rates so quickly before cutting them three times during 2019.
“Now, with all of that, had we not done the big raise on interest, I think we would have been close to 4 percent,” Trump said. “And I — I could see 5,000 to 10,000 points more on the Dow. But that was a killer when they raised the rate. It was just a big mistake.”
The president has repeatedly taken the Fed and its chair, Jerome Powell, to task for raising rates too quickly, in his view. Trump nominated Powell to the role in November 2017, and the Fed raised rates four times in 2018.
The president’s remarks Wednesday echoed those his top economic adviser, Larry Kudlow, made to CNBC on Tuesday, when he predicted 3 percent growth in U.S. gross domestic product in 2020.
“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” Kudlow said Tuesday. “You’ve gone from 1.5 percent to 2 percent growth. We had it going at almost 4 percent, then the Fed tightened.”
Manufacturing and trade data released this month suggested the American economy ended 2019 on a strong note. The economy is expected to grow more than 2 percent in the fourth quarter. That would represent a slowdown from the 2.9 percent increase in 2018, and 2 percent growth would still suggest the decade-old expansion is set to continue into this pivotal election year.
The Trump interview came hours after the first full day of impeachment proceedings wrapped up in the U.S. Senate and a day after Trump gave a speech to the World Economic Forum in which he boasted about U.S. economic gains under his watch.
Several observers said the address sounded like a campaign speech as the president seeks reelection in November’s election.
From a policy standpoint, Trump stood firm on his use of tariffs in trade negotiations, particularly as his administration looks to follow its so-called phase one trade deal with China with a second-phase pact. This stance has made business leaders in Davos skeptical that the two nations would reach an agreement before Trump’s term is up in a year.
The full interview with Trump is slated to air at 5 a.m. ET on CNBC’s “Squawk Box.”