White House Says Despite Stock Market Volatility, Economy Is Doing Well

The stock market swung dramatically up and down on Wednesday, ending about where it started the day — after record losses earlier in the week. President Trump's top economic adviser says it's important to keep the volatility in context.

"The fact is that the fundamentals for the economy are very sound," Kevin Hassett says in an interview with NPR. "Wages are going up a lot. Even in the employment report that came out last week, we saw the highest rate of wage growth in about a decade."

He says the recent volatility is "not related to the fundamentals, which as the president notes, are very strong."

Interview Highlights

On whether the stock market turmoil was predictable

There have been times when we're pretty close to a recent recession where when we get positive job news, it's a real positive. There have been other times where we're as advanced as we are now into a recovery and when we get lots of positive news, like we're seeing, it's viewed by markets as good news as well, because the market has a lot of clarity about the future of interest rates and Federal Reserve policy.

On whether the tax law is playing a role in the market activity

A lot of the equity market movement from last year, clearly, was related to the fact that equity markets started out with some probability in their heads about whether the tax bill would pass. And along the way, as that was going on, equity markets were clearly heading up. Now that the tax bill has passed, then the market has factored in that change in the tax rate into prices and really what happens next is that the evolution of the economy, of earnings and interest rates will continue — as they always do — to affect valuations.

On whether, after taking credit for rising stock markets, President Trump should take blame for the recent losses

I think you're focusing right now, as one shouldn't, on day-to-day fluctuations. The fact is now that if we go back to the day he was elected. I'm guessing ... the medium-term trend of the market being up 35 percent. It's not up 35 percent because of mysterious factors. It's up 35 percent because of substantive policy changes.

There are going to be day-to-day fluctuations. Markets do that. But the fact is that there's been a very, very large trend upward since he was elected, that any economist who runs the math would tell you is what you would expect given the policy changes that we've seen.

On the low African-American unemployment rate Trump touted, which was then revised upward

(In his State of the Union address, Trump said he was very proud that African-American unemployment was at its lowest rate ever recorded. Three days later, the jobs report showed that black unemployment jumped from December's 6.8 percent to 7.7 percent in January.)

Last year was still the best year on record. You have to understand that the jobs report is based on a sample that has sampling variation that goes up and down every month. And there's a very positive trend for employment for people of all races and that blip really looked quite a bit different from the rest of the report and it's something that our statisticians think is related to the sampling properties of the jobs report and it'll be reversed in the next month or two.

The audio version of this story was produced by NPR's Christina Cala and edited by NPR's Selena Simmons-Duffin. NPR's Wynne Davis adapted it for Web.

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