U.S. Economic Growth to Hit 5% for a Short Time

Larry Kudlow, the National Council Director, believes that the U.S. gross domestic product could hit 5 percent for a short period, while the economic growth bounces back to its long-term trend.

When he was asked whether the economy could post a 5 percent annual GDP as it recovers from the financial recession, Kudlow answered “we could.”

“Will we get 5 percent forever? No. But there's a catch up here,” stated Kudlow. “Any economist will show you the long-term trend line for GDP versus the actual now: We're like several trillion dollars below where we should be based on the long-term trend lines. I want to get back to that full potential.”

He also said that the Trump administration would focus on tax policy and regulation rollbacks as it seeks to foster a healthier economic environment.

“President Trump is saying America is open for business,” Kudlow said. “Animal spirits have already started to jump under this president and his policies and therefore I hope for more of the same.”

Meanwhile, the White House confirmed that Kudlow accepted the post of National Economic Council director last month. President Donald Trump offered him the position after the departure of Gary Cohn.

$1.2T Weapon of China

On Wednesday, China announced that it might put tariffs on $50 billion worth of U.S. goods in retaliation against the plan of the Trump administration for imposing 25 percent duties on Chinese imports.

However, if the trade tension will intensify, more tariffs could be slapped on more goods. China, on the other hand, could fire back in a more significant way by selling a large chunk of the $1.17 trillion of U.S. treasury bonds it holds.

Over the past years, China has bought scores of treasury bonds since it has U.S. dollars that need to be spent. Like any other investor, China wants to put some of the greenbacks it’s made off its exports to the U.S. into safe investments, and there is nothing safer than the U.S. bonds.

China has owned around $1 trillion of U.S. bonds for several years and it has held on to these assets, collecting billions in interest payments.

According to Jeff Mills, a co-chief investment strategist, this could result into a major havoc on international markets, if China will sell off those bonds in a fit of rage aimed at President Donald Trump.

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