Speaking to reporters outside the White House, Peter Navarro defended the shrinking GDP.
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00:00I just want to make some brief remarks limited to the economic data today.
00:07This was the best negative print, as they say in the trade, for GDP I have ever seen in my life.
00:15It really should be very positive news for America.
00:20The way you calculate the gross domestic product is it's four drivers of GDP.
00:27It's consumption, investment, government spending, and what's called net exports.
00:35And when you have more imports than exports, you have a drag downward on the GDP.
00:45So you have to kind of calculate across the four components.
00:48So what happened with the numbers today is we had a fairly extraordinary surge of imports that was totally driven by the rest of the world trying to get their products in here before the tariffs took full hold.
01:09So the great news about that is that's a one-shot deal.
01:12So next time we get the data, that won't be the case at all.
01:18And, in fact, it will reverse, and that will contribute to growth.
01:21So when you strip all of that out and you strip out the volatility of inventories in the equation, we actually had about 3% GDP growth, which is very, very good and quite encouraging for employment.
01:37With respect to how these numbers were driven by Trump economic policy, we have a number of things going.
01:48We have, first of all, the tariffs themselves, which are driving a tremendous amount of domestic investment in.
01:56We have the increasing certainty, it's now a high probability, but the increasing certainty that we're going to pass a tax bill very quickly, which will allow for the 100% of expensing, not just of equipment, but also of buildings when you manufacture here in America.
02:21So that stimulates investment, because it's going to be retroactive to the first of the year.
02:28So we're seeing that.
02:31And we've already had $5 trillion in pledges, so all this is coming in.
02:37And the data point, which was extraordinary, was a, I think it was a 22% increase, 22% increase in domestic investment.
02:49I mean, that is, like, huge, literally off the charts.
02:53You never see anything like that.
02:55And then consumption, the important thing to understand here for the finance types is that we distinguish between what's called soft data and hard data.
03:06So we've seen, amidst the media barrage against the Trump tariffs and warnings and all of that, a slight deterioration of consumer sentiment and, to a certain extent, business sentiment.
03:23That's what we call soft data.
03:25But when you look at the hard data, all we're seeing is good, strong news.
03:31So the idea that there's a recession coming should be heavily discounted, because when we take into effect that the tax cut's coming and the underlying strength of the economy, then I think all things are good.
03:50So we felt really good about that number when you fully understand it.
03:55And then that's pretty much all I've got to say about that.
03:59I'll take it.
04:00I'll take it.