Lawrence Kudlow is assistant to the president for economic policy and director of the White House’s National Economic Council.
President Trump travels to Canada to attend his second Group of Seven summit as the leader not just of the largest and fastest-growing G-7 economy in the world but also as the most important pro-growth reformer of our times.
The cynics and the doubters said it couldn’t happen. But just 500 days into his presidency, President Trump has demolished the fashionable and fatalistic theories of permanent secular stagnation.
The U.S. economy has been growing close to 3 percent over the past year — a rate once thought impossible — and is on track to get even growthier in the second quarter. Business is booming as corporate spending on new capital equipment has surged in 2017 and 2018. Hiring and wages are rising, too. Household net worth has soared to an almost unimaginable level of $100 trillion.
The most recent jobs figures show extraordinary job growth and an unemployment rate of 3.8 percent, the lowest level since 2000. Since the president took office, 3 million new jobs have been created, including more than 300,000 manufacturing jobs. The share of the workforce filing new unemployment claims is at a record low. Small-business confidence stands near 35-year highs.
The impact on American society of all this economic growth is profound. The unemployment rate for African Americans is at the lowest level ever recorded. Before December 2017, that rate had never fallen below 7 percent; it is now below 6 percent. The Hispanic unemployment rate is near an all-time low. And the unemployment rate for women is at the lowest level in almost 65 years. Almost 3 million people have been lifted off food stamps since the election.
Thanks to the president’s leadership, America is entering a new era of economic growth and prosperity that promises to be larger and longer than we have seen in decades. The remarkably strong U.S. economy holds some key lessons for other economically advanced democracies.
First, it shows that President Trump’s economic policies are working. Tax cuts, regulatory reduction and increased energy development are proving to be a powerful combination. These policies encourage hard work and entrepreneurship rather than punish them. The war against success has ended. The world has heard President Trump’s simple message: America is open for business, and we are committed to being the most competitive economy in the world. As a result, trillions of dollars of investment capital from all parts of the globe are pouring into America once again.
The second lesson G-7 leaders should take from America’s comeback is one the president has emphasized from the start: Economic security is national security. American strength at home means American strength abroad. And what is true for the United States alone is also true for the alliance of democratic nations as a whole. If Western democracies are to confidently stand for freedom and civilization, for strong values and for strong families, then together we must have societies sustained by robust economic growth.
Third, our friends and foes alike should recognize that President Trump has been remarkably faithful in keeping his campaign promises. From massive tax cuts to historic regulatory reduction to forcefully challenging one-sided international agreements, he has done exactly what he said he would do. There’s a simple lesson in President Trump’s record of achievement: Believe him.
Nowhere is this lesson clearer than when it comes to President Trump’s passion as a trade reformer. President Trump supports a vision of free trade that is fair and reciprocal. As a pro-growth reformer, the president understands that fair and reciprocal trade can knock down barriers, open up export markets and increase investment, which is the path to lasting economic growth.
But this vision has been thwarted in recent decades by a lack of reciprocity, along with unfair and often illegal trading practices, including massive intellectual property theft. Country after country has been putting our global trading system at risk by raising tariffs and non-tariff barriers, protecting sectors from automobiles to agriculture. So do not blame President Trump for taking decisive actions that protect our American workers.
Past U.S. administrations — both Republican and Democrat — have paid only lip service to dealing with this breakdown. Not President Trump. He has shown courage and decisiveness to prevent harm to the American economy and its workforce.
As a lifelong free trader myself, tariffs have not been my preferred policy tool. But at a time when nations have become so unwilling to play by the rules and restore reciprocity, tariffs are a wake-up call to the dangers of a broken trading system that is increasingly unfree.
Tax, regulatory and trade reforms are the building blocks of a lasting prosperity for all people. Headed toward the G-7 Summit, President Trump reminds us that a rising tide lifts all boats. Perhaps the other participants will take notice.