A top White House economic official is encouraging investors to stay the course after last week’s severe plunge in the stock market.
President Trump’s chief economic advisor, Larry Kudlow, says the overall picture still looks great.
“These kinds of corrections are absolutely normal. This one, so far, is rather moderate. I think it’s about 5 percent or so, 6 percent. We’re still ahead year-to-date in the major indexes by 4 or 5 percent. The economy is in terrific shape. We are in an economic boom,” Kudlow said.
Stocks have settled down a bit since the recent correction, with the Dow, S&P 500 and Nasdaq in positive territory Tuesday. That’s partly due to some more good economic news about job growth.
In August, US employers posted the most job openings in two decades. Hiring also reached a record high with employers hiring roughly 5.8 million people.
The unemployment rate is at a mere 3.7 percent which is nearly a five-decade low. Companies are desperately trying to hire more employees to meet the demands caused by solid economic growth.
Several market analysts believe the worst of the correction is over although others say another down move is possible. But most believe this was just a correction and that stocks will recover and eventually reach new highs.
Some investors are still nervous though because of concerns about rising interest rates and fears that those higher rates could stymie economic growth.
“Higher interest rates need not be a threat – they can and should be taken as a sign of economic strength,” said Carl Tannenbaum, chief economist for Northern Trust.
Meanwhile, Kudlow is also trying to ease concerns about the economic impact of US tariffs on China.
Mark Haefele, chief investment officer at UBS Global Wealth Management, told his clients recently that those tariffs are hurting US businesses. “In the past few days, a handful of companies exposed to trade with China have discussed how the tariffs are starting to adversely impact their business through both higher costs and slower demand.”
But Kudlow says the administration is working on setting up a meeting between President Trump and China’s President Xi Jinping at the upcoming G-20 summit in Argentina in November, noting the tariffs were only intended to force China to the bargaining table in the first place.