Treasury Official Joe Lavorgna talks robust Q3 GDP numbers

Melissa Lee (Host) 00:00.350

for more let's bring in joe livonia counselor to the secretary of the treasury department joe great to have you with us would you agree with

Joseph Lavorgna (Counselor to the Secretary) 00:06.790

that sentiment i do i mean the thing is the GDP numbers which we could get into were fantastic was a little private sector LED but what struck me melissa is the profound weakness in the interest sensitive sectors of the economy such as structures and residential structures which

Joseph Lavorgna (Counselor to the Secretary) 00:22.980

are factories by the way they'll get a huge lift with the tax bill twenty twenty six should be great but we've had seven quarters in a row where structures investment declined three quarters in a row were residential investments declined and that certainly sensitive related so

Joseph Lavorgna (Counselor to the Secretary) 00:40.230

yes the economy is booming i still think the potential the economy is is excellent as the president said in twenty twenty six should be a banner year given these current current trends we're seeing so if the

Melissa Lee (Host) 00:51.390

economy is booming joe why why is there a need to hand out two thousand dollar stimulus checks and why is there the need to cut interest rates if the economy is booming shouldn't we be concerned about inflation

Joseph Lavorgna (Counselor to the Secretary) 01:04.850

well yes inflation certainly an issue it rose to a forty year high under the prior administration what we're seeing melissa this is a really a capex LED boom we're seeing a significant narrowing in the trade deficit you will start to see more reindustrialization more

Joseph Lavorgna (Counselor to the Secretary) 01:20.850

reindustrialization more building here in the US and those sort of booms tend to be very disinflationary the yield curve is very flat the real broad trade weighted dollar still at a very high level inflation patients are very well contained so certainly interest sensitive

Joseph Lavorgna (Counselor to the Secretary) 01:37.590

activity which i alluded to has been soft that should recover if rates come down and rates should come down so that the economy could reach its full potential on the checks i wouldn't categorize that as stimulus checks that's money given to a hard working men and women in the

Joseph Lavorgna (Counselor to the Secretary) 01:52.310

armed forces this was done back in july this isn't new information it'll go a long way to helping them deal with cost of living increases OK

Melissa Lee (Host) 02:01.400

so even though it's it's money given to somehow households it is not going to be inflationary it's money

Joseph Lavorgna (Counselor to the Secretary) 02:07.430

yes it is it's an important amount it's not an amount that is going to change the inflation dynamic a bigger number which is going to impact even a bigger swath of americans working class americans the no tax on tips and overtime those are basically supply side initiatives if

Joseph Lavorgna (Counselor to the Secretary) 02:23.510

you're going to be encouraged to work more over time you're working hard for tips you're going to work more we have seen labor force participation edge higher i think it will go up significantly more next year so again that's not inflation that is more productive capacity more

Joseph Lavorgna (Counselor to the Secretary) 02:38.510

labor coming into the market that's what we saw in the first administration and we should see it again supply side driven growth so

Melissa Lee (Host) 02:46.270

it do you think that there is not any inflation problem inflationary problems in the economy at this point i mean when americans are facing higher health care costs and higher electricity costs and higher insurance costs is there an inflation problem is the fed too hung up on

Melissa Lee (Host) 03:03.070

inflation

Joseph Lavorgna (Counselor to the Secretary) 03:05.230

well inflation you know right now inflation the inflation rate right now is is two seven it was a little higher than that the last month that joe biden was in office inflation we believe will go lower gasoline and energy more broadly speaking melissa is a very important

Joseph Lavorgna (Counselor to the Secretary) 03:22.550

disinflationary force because gasoline energy is used in so many products there are many second and third order effects we do expect the inflation rate to move lower the markets are certainly in agreement with that as i mentioned inflation expect are very stable we are seeing if

Joseph Lavorgna (Counselor to the Secretary) 03:37.710

look at blue collar wages non supervisory production workers through the first eleven months of this year wages are up one point six percent annualized that is one of the biggest increases starting new administration in decades so the policies are trying to be designed to raise

Joseph Lavorgna (Counselor to the Secretary) 03:53.110

after tax incomes lower the inflation rate build up productive capacity and improve living standards right now i say the record is very good nobody thought that i spoke to even in the private sector thought the economy could generate four percent type of growth two quarters in a

Joseph Lavorgna (Counselor to the Secretary) 04:07.310

row and we know from the last CPI which is november cause inflation data today are stale we know from the november inflation data inflation surprised meaningfully to the downside so we hope these trends and believe these trends will continue