Kudlow made this comment when he was asked by “Fox News Sunday” guest anchor Dana Perino what additional measures might be needed to bolster the economy. “I don’t think additional measures are needed,” he replied, making this statement about how the renegotiated North American Free Trade Agreement would result in an additional 180,000 jobs a year.
What’s that claim based on?
A White House official said Kudlow was referring to an estimate of 176,000 jobs in a report issued in April by the U.S. International Trade Commission (USITC). The report uses an economy-wide model to estimate what the effect of the agreement would be once the U.S. economy has adjusted to the full implementation of the law.
Full implementation is assumed to be six years after the rewritten trade agreement, known as USMCA for the United States-Mexico-Canada Agreement, enters in force. “Estimates indicate that U.S. real GDP [gross domestic product] would grow by 0.35 percent ($68.2 billion) and employment would grow by 0.12 percent (about 176,000 jobs),” the report says.
Note that the report says ⅓ of a point of GDP, not ½ a point as Kudlow claimed. And it says 176,000 after six years, not every year.
“The way ITC writes it is ambiguous/confusing,” the White House official said in an email. “Basically, combined, both are right. It’s 176k per year once fully implemented, which is year 6.”
Confusing may be in the eye of the beholder, but the report seems clear to us.
“The economy-wide model estimates the U.S. economy’s complete adjustment to the full implementation of USMCA, which is assumed to be year 6 after USMCA enters into force,” the report says. “Therefore, the estimates show the impact of the modeled provisions after the economy has responded to the changes in USMCA.”
Moreover, USITC spokeswoman Peg O’Laughlin confirmed to The Fact Checker that this model is the standard way the USITC evaluates trade agreements. Thus, there should be no confusion on the part of White House officials.
O’Laughlin added that the report offers “no year-by-year numbers” and looked only at the number of jobs created after six years. “It was a one-year number,” she said. Thus the report makes no prediction about what would happen after seven, eight or nine years — and certainly does not say 176,000 jobs per year.
We often warn readers to skeptically view any predictions of jobs created from trade deals — here’s a fact check of a Four-Pinocchio claim by then-President Barack Obama about a job estimate involving the Trans-Pacific Partnership — as such estimates rarely match with the reality. But it’s worth noting that even a gain of 176,000 jobs after six years (effectively 29,000 a year until full implementation is reached) is relatively small. The U.S. economy has gained more than 176,000 jobs in a single month 19 times since Trump took the oath of office.
The Pinocchio Test
Kudlow suggests no action is needed to deal with a possible economic slowdown because of the rewrite of NAFTA. But he incorrectly claims the 180,000 estimate generated by the USITC represents a yearly gain in jobs — and suggests the effect on jobs would be felt immediately. Instead it’s an estimate for the number of jobs created after six years — or beyond the hoped-for second Trump term.
We wavered between Three and Four Pinocchios. At least the number was not made out of whole cloth, even if White House officials apparently don’t know how to read USITC reports. Kudlow earns Three Pinocchios.
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