WASHINGTON–White House Chief of Staff Mick Mulvaney told credit unions here much of the talk about a recession is being driven by political opponents of the Trump Administration who are looking for gains in the 2020 elections.
And that includes many in the media, Mulvaney suggested.
Mulvaney told NAFCU’s Congressional Caucus the numbers make clear the economy is strong.
“We do hear a lot of talk about recession, and whether or not people are trying to talk up the likelihood of a recession,” said Mulvaney. “I could go through all the numbers about why we think that’s wrong. The numbers are just fantastic, but I would rather talk about what we see. For instance, the jobs numbers. We hear they’re so bad, oh my god, there only 130,000 (for August). When the previous administration was here and wrote their budget, they projected 14,000 new jobs (for August of 2019).
Numbers Are Good
“The numbers are really fundamentally good. The growth of the economy is a real simple equation. It’s how much stuff do we make. It’s the number of people working multiplied by how much they produce,” Mulvaney continued. “All this talk about how bad things are, we look at these two things: employment and productivity. We have looked for ways to invest in productivity and now we see it up almost 2% for the first time in many, many years. Take that productivity increase with the number of people working, and we’ve created nearly six-million jobs. Remember the unemployment rate isn’t the number of people who aren’t working, it’s the number of people who aren’t working who want to be working. Workforce participation is up in this country, despite the fact we’re getting older as a nation.”
Mulvaney said a number he likes to look at that many overlook is the “quit rate,” the percentage of people who lost their jobs by their own free will. That number is up, he said, which is a healthy reflection of a strong job market.
So why all the reports around a recession? Mulvaney said it has something to do with the folks “in the back of the room” where the media was seated, as well as people who would benefit politically from a recession.
Following his formal remarks, Mulvaney responded to several questions from the audience:
Question: How satisfied are you with the CFPB since you left?
Mulvaney: “(CFPB Director) Kathy (Kraninger) worked for me at OMB. I have nothing but the highest confidence in her. I hired most of the people there. These are people deeply steeped in Dodd-Frank. As a member of a credit union I’m very confident that the future leadership of that place will be in good hands.”
Question: The economy is about consumer spending. While we in industry aren’t happy with rates being flat and inverted, the consumer is benefitting and hopefully that goes for the next year or so.
Mulvaney: I do worry about negative rates. Even the ECB now is trying to review whether negative rates have done more harm than good to the European economy. I think it makes your business a lot harder; it makes banking, generally, a lot harder. Negative rates send the exact wrong signals, as they are anti-inflationary. But that’s the Federal Reserve’s decision.
Question: We encourage thrift as credit unions. My question is, why do we have to tax thrift? Couldn’t we tax it if you had more than $10,000 in the bank, but if you have less, shouldn’t you be able to keep it?
Mulvaney: That’s part of the discussion we have internally about low rates. Low rates are good for borrowing and are interesting, but both are a challenge to encouraging people to save money. Regarding taxing thrift, I’m pretty sure if you’re talking about those folks struggling to come up with $400, my guess is the standard deduction doesn’t tax their savings.