A top economist who worked in the Reagan administration thinks the tax reform bill President Donald Trump signed into law late last year has made the U.S. the “best country” for business.
The U.S. economy is about to benefit from an “investment boom” thanks to the tax legislation, economist Larry Kudlow said in a radio interview last week.
“We are on the front end of an investment boom that’s largely tied to the tax cuts,” Kudlow told John Catsimatidis, the host of New York AM 970’s “The Cats Roundtable.”
“(It) will be stronger than anything we’ve seen in probably 25 years,” Kudlow continued.
Kudlow — who served as a senior economic adviser on the Trump campaign — then suggested that the tax reform legislation is the reason the U.S. is once again turning into a nation where companies actually want to do business. The legislation benefited businesses by cutting the corporate tax rate from 35 percent to 21 percent, meaning they have less incentive to move their operations overseas.
“America is once again becoming the best investment environment in the world — the best country in which to do business,” Kudlow said. “And that’s a powerful positive.”
The economist did not fail to mention the recent volatility in the stock market. Last week was the Dow Jones Industrial Average’s worst in two years, though the index recovered on Friday, gaining more than 300 points.
On Monday, the Dow built on those gains, climbing more than 400 points.
According to Kudlow, though, the stock market’s performance is not always an accurate indicator of how the economy is doing because this volatility is often driven by computers, not real people.
He noted that that last week, traders were selling a lot of shares due to the higher levels of the CBOE Volatility Index, also known as the fear index.
“It’s a free country John, and it’s a free market, but I think we go too far with electronic trading,” he said. “It doesn’t reflect the fundamentals of the economy either, which are very good.”
In a Wednesday tweet, meanwhile, President Donald Trump also claimed that the stock market does not reflect the true state of the economy.
“In the ‘old days,’ when good news was reported, the Stock Market would go up. Today, when good news is reported, the Stock Market goes down,” Trump wrote.
“Big mistake, and we have so much good (great) news about the economy!”
Kudlow, who worked as an associate director in former President Ronald Reagan’s Office of Management and Budget, recalled that at one point in the 1980s, the stock market was similarly unpredictable, though the economy was strong.
Thus, he urged investors not to panic.
“The country is good, profits are good, the mother’s milk of stocks. … This is not going to be a permanent crash. This is not 2008. People shouldn’t panic. In fact, stocks are going to be cheaper. I’d buy them and I’d hold them for the long run,” he said.
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