The United States economy should grow by another 3 percent in 2019, despite some disappointing indicators that kicked the year off, a top economic advisor to President Donald Trump told CNBC on Tuesday.
If it happens, it would be the second year U.S. economic growth defied expectations.
“We’re sticking with our guns. We think we’re going to have another 3 percent year,” said Kevin Hassett, chairman of the president’s Council of Economic Advisers.
Hassett said his agency “took a lot of flak” for predicting 3.1 percent growth for 2018. However, it looks to be “spot on” if the fourth-quarter numbers come in as expected at about 2.5 percent, he said on “Power Lunch.” However, the latest forecast from the Atlanta Fed is 1.5 percent in real GDP growth in the fourth quarter.
The year started off with a partial government shutdown, which the nonpartisan Congressional Budget Office said cost the economy $11 billion, and U.S. consumer confidence in January hitting its lowest reading in a year and a half.
However, consumer confidence rebounded in February and job growth in January shattered expectations. Nonfarm payrolls grew by 304,000.
“We started the year with a 300 jobs number and most quarters that start with a 300 jobs numbers in the first month end up with a growth number north of 3 percent,” Hassett said. “That’s what we’re looking for for the year but even the slowing that is in some of the indicators, I don’t think is a really serious thing in the first quarter.”
Most economists don’t agree with Hassett’s projection. They expect growth in a 2 to 2.5 percent range this year.
“We are carrying a lot of momentum forward,” Hassett contended. “And don’t forget that the capital spending that drove growth last year is going to produce output this year. So they built factories last year. They are going to flip the factories on this year and we’re going to get growth from that.”
Hassett also addressed the surprise many taxpayers are feeling this season thanks to the new federal tax law. Some Americans have expressed dismay that they are getting less back from the government — or owe more money — than expected, despite being promised their taxes would be reduced. In fact, the average refund is down 8.7 percent from a year ago, according to the IRS.
However, Hassett said the Treasury Department already adjusted withholdings last year so that people would see the tax cuts “right away.”
“The fact is that people got their tax cuts and they were visible in their checks last February. And that’s one reason why we had a 3 percent year,” he said.
“Would you rather have your money now or a year from now?” added Hassett, who said the administration will continue to follow the situation closely. “It’s really, really early in the season. And we’ll have to wait and see.”
— CNBC’s Jeff Cox contributed to this report.
