National Economic Council Chairman Larry Kudlow appears on Fox News Sunday to discuss economic policy, budgets and taxes. Since the discussion is the economy, Wallace quickly puts on his doomsday hat.

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Economic analysis can get weedy…. so a simple way to look at productivity is to think about baking bread in your kitchen.
If you were going to bake 4 loaves of bread it might take you 2 hrs start to finish. However, if you were going to bake 8 loaves of bread it would not take you twice as long because most of the tasks can be accomplished with simple increases in batch size, and only minor increases in labor time. Your productivity measured in the last four loaves is higher.
Economic Productivity is measured much the same way, within what’s called a production probability equation. Additionally, if two hours of your time are worth $40, each of four loaves of bread costs $10; but if you make 8 loaves in the same amount of time the labor cost is only $5/per loaf.
From 2007 through 2017 the average rate of productivity increase was 1.3%. In the fourth quarter of 2018 productivity was 1.9%.  That means total business output increased as more product was demanded from within the business operation. Throughout the economy people just wanted more stuff.  However, the most important numbers for MAGAnomics (Main Street USA) center around manufacturing and durable goods.
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White House trade adviser Peter Navarro has been a core member of the U.S. trade team providing a brutally honest perspective toward how specific trade engagements can directly benefit the U.S. economy and U.S. worker.
Navarro has gained a reputation as a trade hawk, specifically as it relates to confronting the one-sided trade schemes of China.  However, that encapsulation doesn’t accurately reflect Mr. Navarro’s value.
The Big Club hates him.  Yes, Navarro is hated and opposed by all the right people.  He might be rough around the edges, but he fights… for ‘America First‘.
Navarro is unapologetic in openly calling attention to the process where Wall Street, the multinationals (corporations and banks) have gained power and influence over politicians in Washington DC.  Wall Street funnels hundreds-of-millions to Tom Dohohue, President of the U.S. Chamber of Commerce.  Donohue controls an army of K-Street lobbyists who purchase politicians and sell their CoC created legislation.
Specifically because he calls attention to the brutal truth of a corrupt process, he has become the target of attacks from Wall Street’s beneficiaries, the big club and Decepticon senators who take massive campaign bribes from Tom Donohue.
In a recent Op-ed, Peter Navarro highlights how the Trump economic team is delivering on a promise for structural global trade reform that directly benefits the U.S. economy, U.S. workers, and Main Street USA.
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The Canadian government shocked the professional financial and economic media with their latest fourth quarter GDP release showing the economy has essentially come to a grinding halt at 0.1% growth.  [Compare to U.S. GDP growth of 3%]
The Canadian Q4 GDP growth isn’t one percent, it’s one-tenth of one percent: 0.1%, essentially halted; but everyone discussing this is missing something very important.
First, The Financial Post headline:

[FP] Canada’s economy practically came to a halt in the final three months of 2018, in a much deeper-than-expected slowdown that brings the underlying strength of the expansion into doubt.
The country’s economy grew by just 0.1 per cent in the fourth quarter, for an annualized pace of 0.4 per cent, Statistics Canada said Friday from Ottawa. That’s the worst quarterly performance in two and a half years, down from annualized 2 per cent in the third quarter and well below economist expectations for a 1 per cent annualized increase.

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Okay, now USTR Robert Lighthizer’s cautiously worded enforcement testimony starts to take on a fuller context.  When Ambassador Lighthizer was testifying before the mostly decepticon House Ways and Means Committee, he started to outline his newly designed trade enforcement mechanism… but he stopped; he didn’t want to reveal too much.
Now listen to Larry Kudlow describe “enforcement”.  WATCH:

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If you watched the USTR testimony you would have seen how the “enforcement” mechanism within the U.S-China trade negotiations was the priority for Lighthizer’s focus; and he specifically mentioned “layered” enforcement triggers, specific to each sector, and issue.
CTH has never seen a U.S. Trade Representative so structurally willing to clear-cut the entire bamboo forest if needed. Lighthizer is intensely focused on enforcement.
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White House Council of Economic Advisers Chair Kevin Hassett discusses the U.S. economy’s 2.6 percent growth in the fourth quarter, and the outlook for the U.S. economy through the rest of 2019.

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Notice how most of the financial pundits are focusing on what the “global economy” needs; specifically what the EU and China need to do to gain economic growth.  From that position, the U.S. trade reset is adverse to their financial interest; those financial interests are driven by Wall Street not Main Street.
Economic nationalists who understand the concept of ‘America First’ focus on what the USA economy needs, and do not accept a position that the U.S. should acquiesce our position to benefit the economic needs of other nations.  That’s the primary difference.
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National Economic Council Director Larry Kudlow appears on CNBC to discuss the latest releases of economic stats and the on-going trade talks between the U.S. and China.  Kudlow notes the U.S. and China are making progress specifically due to USTR Robert Lighthizer.  Interesting interview.

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Nuance and team subtlety are important here. Larry Kudlow is a loyal soldier, no question, but his economic leaning is toward trade outcomes that benefit Wall Street… Robert Lighthizer is a fierce battle-hardened trade expert, with an outlook that is multi-generational toward Main Street.
Listen to Lighthizer talk about the economic future for his grandkids in his congressional testimony yesterday and you’ll see what I mean. NO COMPROMISE with China.  Lighthizer is prepared to fight all of Main Street’s enemies, including congress.
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You might want to bookmark this congressional testimony from U.S. Trade Representative Robert Lighthizer to the House Ways and Means Committee for specific purposes…
There are many people who are understandably worried that any U.S. trade agreement between the U.S. and China might not have the most ferocious teeth behind a binding enforcement provision.  If you listen to Ambassador Lighthizer he makes clear that President Donald Trump, and the negotiating team, will not accept any agreement that does not have the strongest enforcement mechanisms at every level.

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In his testimony Lighthizer walks through the basic outline of what a U.S. successful agreement would look like.  While increased Chinese purchases to lower the deficit are a part of the goal, they are a VERY SMALL part of the goal.
The protection of U.S. intellectual property; the removal of non-tariff trade barriers; the confrontation of currency manipulation and the sector by sector enforcement provisions are the primary objective.
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Commerce Secretary Wilbur Ross has completed the section 232 investigation on the auto industry, reviewing the sector as a vital economic interest for continued national security.

The content of the investigative finding is unknown. The Commerce Department has privately delivered the 232 report directly to the White House. However, with the possibility of the report empowering President Trump to implement 20 to 25% import auto tariffs industry executives are proactively going bananas.
An important aspect here is that the USMCA (U.S., Mexico and Canada) agreement exempts the trilateral North American pact from any auto tariff fear. If the vehicle consists of 75% North American (USMCA) content, there’s no tariff.
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The Bureau of Labor Statistics released the latest consumer price information today which shows overall low inflation at 1.6 percent (with energy price deflation, and flat food prices).
Excluding food and energy costs the total CPI remains low at 2.2%.   This low inflation is the exact opposite of what financial media were predicting when President Trump began the series of import tariffs in 2017, which continued throughout last year.

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When President Trump began the tariffs against global Steel and Aluminum imports; and when President Trump began the first set of tariffs against Chinese imports; almost all financial media went into fits of apoplexy claiming we would see massive increases in prices.   Reality shows their doomsday predictions were completely over-hyped.
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