Is Peter Navarro right about the economy?
On Monday, in a different interview with Fox Business, Mark Vitner, a senior economist at Wells Fargo, said that between 2009 and 2016, the average GDP growth rate in the US was 1.9% per year. He said that in the last few years, the GDP grew at an average of 2.6%. President Trump won the US presidential election in 2016 and assumed office on January 20, 2017. Vitner added that the rollback in regulations helped spur economic growth. President Trump’s tax cut also boosted the US economy.
In the same interview, a Fox Business anchor highlighted the Trump administration’s achievements. Notably, 5.6 million jobs have been created since President Trump took office. In May, US unemployment fell to 3.6%—the lowest level in the last 49 years. Last month, the unemployment rate was at 3.7%. During the Obama administration, the GDP grew at the lowest rate for any presidential tenure since 1945.
So far, the S&P 500 Index (SPY) has risen 14.8% in 2019. Among the four largest economies, none of the equity indexes have seen a double-digit rise. At the current valuation, the S&P 500 Index is trading at a PE ratio of 19.9x. The S&P 500 Index’s 15-year average PE ratio is 17.4x.
Odds of a recession
Peter Navarro discussed the USMCA
Peter Navarro was asked about what he wants to hear from Fed Chair Jerome Powell. He said maximizing the growth and not minimizing the employment rate. Also, growth shouldn’t cause inflation. He also wants an “acknowledgment of chess match here when other central banks around the world are lowering their rates that does have negative currency effect and we need to patch them.” Finally, Navarro wants Powell to say, “America we have your back.”
When asked about the trade war and China’s retaliation, Peter Navarro said that he doesn’t agree. He said, “China is bearing the entire burden by slashing their prices, slashing the currency value, and by the way they are hemorrhaging – hemorrhaging their supply chain out to the rest of the world and back here in America.” He said the US is behind President Trump to stop China from stealing technology and intellectual property. Based on a CNN/SSRS poll result released on August 24, President Trump’s approval rating is at 40% compared to 43% in June. Peter Navarro said that smart investors should stay away from any type of recession fears. The US is stronger. A fiscal stimulus across the globe could help avoid a slowdown.