The White House is hoping a positive economic growth report bodes well for this week’s other data drops, including the Federal Reserve’s preferred inflation gauge and July’s jobs numbers, as President Donald Trump tries to ease concerns regarding the prospect of a recession.
“We’re expecting that the number that you saw today in the [gross domestic product] release is about the path of inflation right now,” White House National Economic Council Director Kevin Hassett told the Washington Examiner on Wednesday. “We’re very bullish on the jobs report because we think that after the Big, Beautiful Bill was passed, that already there was a lot of positive momentum. And we think that July is going to be really strong.”
Hassett welcomed Wednesday’s second-quarter GDP report from the Commerce Department‘s Bureau of Economic Analysis, which found that the economy expanded by 3% during the second three months of the year, compared to the first quarter, during which it contracted by 0.5%.
“It’s really one of the best GDP announcements or releases that you can imagine because there’s blockbuster growth way above expectation, and there’s also a real, real, almost collapse in inflation. It went down by about 1.5%, all the way down to 2.1%, which is the Fed’s target,” he said. “So to have high growth with low inflation and also high income growth, personal income growth was 3%, that’s just like about a sweet spot for a GDP release.”
Hassett added that “all of this happened while $127 billion in tariffs were raised, which is clearly not harming the American consumer, and we’ve been downsizing government in order to be more fiscally responsible,” including reducing federal spending on programs and payroll.
“When you’re thinking about what’s going to happen next quarter, you’re talking about 3% momentum, despite the fact that we had the negative drag from people holding off spending, waiting to see if the bill passed, and so I’m looking [at] more like a 4% number for the second half of the year,” he said.
Economists had predicted second-quarter GDP growth of between 2% and 3%, ending speculation of a recession defined by two consecutive quarters of negative growth. But economists have also underscored the importance of analyzing the breadth of data being published this week, including the Federal Reserve’s preferred inflation measure, the Commerce Department’s personal consumption expenditures price index on Thursday, and the Labor Department‘s jobs report on Friday.
“Last quarter’s GDP is considered ‘in the rear view mirror’ whereas the recent monthly employment report gives a better sense of where things are headed,” New York University economics professor Mark Gertler told the Washington Examiner. “So while a positive GDP number would be good news, the employment report gives a better sense of the path the economy is on.”
During his press conference with reporters, Hassett addressed Trump’s announcement earlier Wednesday that he was imposing 25% tariffs on India on Friday, “plus a penalty” on them for purchasing Russian oil during the war in Ukraine.
“Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country,” Trump wrote on social media. “Also, they have always bought a vast majority of their military equipment from Russia, and are Russia’s largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE.”
Hassett repeated Trump’s frustration with India but did not provide any more information related to the penalties.
“I think that what’s going to happen is that India is going to cut their prices to the U.S. in order to maintain their market share,” he said. “Then they might reconsider their practices, which have led to this higher rate. And over time, I would guess that Indian firms will be onshoring production in the U.S. and Indians might even open their markets more to us so that we reconsider a future trade deal.”
The economic adviser similarly downplayed concerns about Friday, when the majority of Trump’s tariffs will go into effect after months of delays amid trade deal negotiations.
“What we’ve seen is that the price of imported goods has dropped enormously because the people who are selling stuff in the U.S. don’t want to lose their market share, and so far, the price of imported goods is actually declining,” he said.
WHITE HOUSE HOPES POSITIVE GDP REPORT WILL PLACATE RECESSION ‘PANICANS’
Hassett expressed confidence that the administration would strike trade deals with Canada and China but appeared to dismiss the idea of a tariff revenue rebate, contending that it could “help us balance budget and reduce the tax burden on American people.”