White House economist projects GDP growth could top 5% amid capital spending boom
· Fox News
A top Trump economic advisor is projecting a surge in U.S. growth, saying the country could see GDP expansion greater than even 6% amid a capital spending boom, particularly if the conflict in Iran ends soon.
"I think we really could be looking at numbers north of four, north of five, north of even six [percent], because there’s so much capital stock growth right now," National Economic Council Director Kevin Hassett told "Sunday Morning Futures."
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Hassett elaborated on the acceleration in capital spending, noting that investment jumped 3.3% in March alone, not at an annualized rate.
"So multiply that by 12, and you're looking at historic capital spending numbers," he added, arguing that the surge is being driven by the Trump administration’s tax policies and onshoring efforts.
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He said the surge in investment is laying the foundation for a sustained period of stronger economic growth once new factories and infrastructure come online.
"Remember that the 2% number that you saw for GDP growth, the reason why it was 2% and not 4 or 5% was that we imported a record number of capital goods because we're building all these factories," he said.
"Once we turn those factories on, you're going to really see growth unlike anything we've seen before."
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Hassett also pointed to the pace of capital stock growth.
"That's sort of like how much stuff that we make stuff with," he explained.
"It's between 5 and 8 percent right now. If you divide that by three, that's about how much GDP growth you get out of just capital spending."
Hassett also discussed the potential for gas prices to fall in the near future, pointing to increased supply once oil shipments begin moving more freely through the Strait of Hormuz.
"That's going to help put prices down relatively quickly," he said.
"Now, there's a little bit of a time lag from that. We've got to get the boats to move from the Persian Gulf to especially Asia, where jet fuel prices are so high, and that can take a month or two but once, basically the gusher opens, then we expect that oil prices could drop relatively quickly and certainly ahead of the election."