Last week, some of the nation’s top CEOs talked and laughed with President Trump while enjoying dinner at the White House, chewing over a US economy that the president claims is headed for growth not seen since the days of the Gipper back in the 1980s.
But privately, many left that night wondering if the president really knows the score.
Tax cuts, deregulation and drill-baby-drill can do wonders to jolt growth, they all agreed.
Tariffs, not so much.
The president’s proposed solutions, they believe, are destined to fall flat.
It’s not all doom-and-gloom, of course, but the US economy is a far cry from the Reagan years of massive growth and low inflation, nor is there much evidence it’s heading in that direction.
The president also appears unaware that the country’s biggest economic problem is that of affordability.
This is not just when it comes to homes, but persistently high inflation that is stoking voter anxiety according to every poll available.
At the Wednesday dinner, Trump predicted GDP growth of 6%, nearly double what it’s growing now.
More people working helps address the affordability problem, he argued.
Higher tax revenues combined with tariffs will help pay down the budget deficit and lower costs even more.
No one at the table — among them JPMorgan’s Jamie Dimon, Goldman Sachs’ David Solomon and BlackRock’s Larry Fink — spoke up at dinner with an opposing view, I am told.
But privately, the attendees were far less sanguine.
Those I spoke to believe based on all the data available, 6% GDP is a pipe dream.
Tariffs will depress growth because less of our products will be sold overseas by countries that retaliate.
Plus, inflation appears to be growing, not subsiding, again thanks to tariff costs.
The affordability crisis is real and whatever Trump is doing isn’t working thus far or the GOP wouldn’t have lost all those races two weeks ago.
Or as one told me: “Trump has some smart economic advisers, but a lot of yes men who simply tell him what he wants to hear,” adding: “I hope he’s right about 6% economic growth because he will need it.”
Fears aren’t a ‘con job’
Then there’s the “solutions” to affordability issues Trump has come up with.
He’s been floating ways to make home ownership more affordable like a 50-year mortgage, even as he beats up Fed chair Jerome Powell to lower interest rates.
The CEOs offered up their own solutions — mainly how to get average people buying more stocks.
That could cover their retirement costs and make owning a home easier since stock returns, historically, have outpaced most other investments.
I am told that Trump’s advisers know things aren’t so great, but to warn Trump that what he’s doing isn’t working is the fastest way to lose your job.
And Trump, of course, wouldn’t be the first president to govern in a bubble.
Joe Biden convinced himself that the border was secure, inflation was low and he was sentient enough to run for a second term.
I can see how it’s difficult for anyone close to Trump to lend credence to the notion of a “crisis” of affordability because it appears to support the left’s agenda.
But Trump has called it a Dem “con job” and recently told my Fox colleague Laura Ingraham that the public’s economic anxiety is “fake.”
That won’t make it go away.
It also robs us of a chance for a serious debate on how to fix this economy.
Tax increase on MAGA
That debate, unfortunately, didn’t happen the other night with Trump, though several of the CEOs later told me the 50-year mortgage will raise home prices, not lower them, because people can borrow more and spread mortgage payments out further.
It’s also a slight of hand, of course, since borrowers will be paying the bank more interest over a longer period of time and accumulating less equity.
Ditto for Trump’s obsession with cutting rates to lower the cost of home ownership.
What he doesn’t seem to recognize is that inflation at 3% is still well above the “target” rate and that’s on top of the massive increases that Biden’s policies led to.
Gas prices are going down, eggs cost less, but other stuff is costing more.
The culprit seems to be his tariffs, lower than first pitched during “Liberation Day” but still adding to price pressures.
Pushing Powell to lower rates in the face of persistent inflation will only make matters worse; inflation is a tax increase on the working class where it is felt the strongest since they can’t speculate their way around it.
It is a tax increase on MAGA.
Again, Trump believes he will soon produce results that will make voters true believers: factory jobs will return, lower gas prices will stifle inflation, a 50-year mortgage will re-invigorate the American Dream.
The GOP will cruise to majorities in the upcoming congressional midterms based on a Reaganesque economic boom.
Like the CEO I interviewed, I hope he’s right.
The evidence is starting to suggest that he’s not.
