Release her first book of photography. Its cold of love and war. Thats it for today. Have a great week and we will see you next fox news sunday. I am thrilled to announce that in the Second Quarter of this year, the United States economy grew at the amazing rate of 4. 1 percent. If Economic Growth continues at this pace, the United States economy will double in size. More than 10 years faster than it would have under either president bush or obama. Paul welcome to the journal editorial report. I am paul gigot. That was President Trump taking a victory lap on the news that the u. S. Economy grew at a robust rate at 4. 1 percent in the Second Quarter. The fastest pace in almost 4 years. Here with a look at whats behind that acceleration is chair of the White House Council of economic advisory. Nice to see you. 4. 1 percent. Economists predicted 4. 4, as you look at the details of the report. What do you like in it . It goes back to a piece i wrote a while back that Corporate Tax cuts would cause a Capital Spending boom. If you look at the average of the first half of the year, we got a Capital Spending boom in the average growth is 3. 1 percent. Its not often that economists can nail it that tightly and it showed its working exactly as we thought. Paul Capital Spending in the First Quarter was more robust than in the Second Quarter. Do you have an explanation for that . One of the things that happened is for Equipment Spending you were allowed to expense it retroactive to october. In the Fourth Quarter of last year, you could deduct a machine at 35 percent so you get a bigger tax deduction. At the start of this year, the value went down to 21 percent to we expected to see a spike and then and negative number in the First Quarter but in fact, we got the spike in the Fourth Quarter but continued strong growth. So Capital Spending by the way is one of those things when it pushes growth, it means the growth will be sustained. Because now we have these new factories and machines in the u. S. Over the next years, they will produce more output. If you have a Capital Spending boom, you can expect that to be sustained growth. Paul heres another surprise, gdp of 4. 1 percent came without any increase from residential housing. Is actually down. One of the bad pieces of news in it. Paul how do you explain that, that Housing Problem . Its something we are studying closely but there are three factors. One is theres an increase in lumber prices and part of that is driven by canadian lumber. Second is homebuilders are saying theyre having a hard time finding workers to build the homes and the third is the hottest real estate markets have Zoning Regulations that make it hard to find property to build a home. Paul sounds to me you may need more immigration did more people, more workers, more gdp and prosperity. We want something that brings prosperity for all americans and he wants to increase gdp on a per capita basis. Basically as the president has emphasized, skilled immigration is the right way to go. Paul you know the big critique from our friends on the left is that this is a sugar high. This isnt sustainable. Its a onetime hits. Whats the case for this being sustainable . You mentioned Capital Investment but what else . The other thing is the president has emphasized opening up areas for oil exploration. There was a big increase in drilling and mining activity consistent with that. The biggest story going to the second half of the year is a lot of times if the economy is really booming, then inventories will be drawn down because people are buying stuff more than producers are making. Then thats a positive for the quarters ahead because the producers want to build up their inventories. Its up a Percentage Point from gdp growth and we expect youll see that come back in the second half. Last year in the fall, we said we see 3. 1. The first tapestry. 1 and were carrying into the second half,
in which the United States would back away from imposing a tariff on imported cars. In return, the eu agreed tomake unspecified purchases of soybeans and liquefied natural gas. This as they work toward the larger goal of zero tariffs , barriers and subsidies lets bring in a Wallstreet Journal Editor and communist tim straw tim straw. First the gdp report, i was hoping for better but what do you make as you examine the details of the report. Is this sustainable . First of all, it is excellent. If the president wants to call it huge, fantastic, beautiful, hes entitled to. This is really the economy hitting a higher gear. Whether its sustainable, i think there is interesting elements and that is very strong Business Investment which suggests higher productivity in the future and higher gross. Theres also this elements within it in
commentators that we publish, that says you cant grow faster than two percent. Trump did predict that. I think he predicted this in the campaign and was laughed at. We are going to 34 percent and maybe five percent. Paul lets move to trade. Lets talk about the truce with the European Union point what do you make of this. Why do you think President Trump moved in this direction . Everything we heard internally from our sources was that he was dead set on really whacking german cars. What changed . Since you were talking about gdp, he said Something Interesting in his Press Conference about those numbers is that the economy is doing fatter wait until we get these trade deals in place and then
it will be even better. Which was notable because it was an acknowledgment that trade matters to the economy and the reverse would matter too. These trade fights are going on are hurting the good work the republicans have done in terms of deregulation and taxes. I think thats what was driving this. It matter that seemed willing to go to a place that trump is now pushing the zero tariffs and barriers. In the shortterm, it has avoided a majorconflict. For longer term, that can be a much harder thing to pull off. Paul so you think there was a Political Part of this and that republicans presumably in the senate and house were telling the president , look, these tariffs are really having an impact in our districts and you need to ease up and reset where you are, at least with the eu. I assume nafta may be going the same direction. Absolutely. By the way, when you impose tariffs as the president has been doing with china and elsewhere, those efforts are felt immediately in these peoples districts. Hes been getting a lot of pushback from the ag sector in different parts of Manufacturing Sector and even from his own Economic Team saying we cant keep going down this road. Paul james, what do you make of the trade agenda going forward. As you look at the gdp numbers, did you see any impact of trade, the Trade Policies in the numbers . You saw a nice contribution from exports. Thats a nice reminder that and everyone included, this is part of the growth strategy. Paul but some of that people think, lets get our ahead of the tariffs and sell the soybeans. We may not get that balance in the second or Third Quarter . Im sure that was part of it but balanced somewhat by the
fear of trade fights discouraging some investment. All the Capital Investment was terrific, it wasnt quite as good as the First Quarter. I think some of that was people being afraid to pull the trigger on a new that we not knowing how this new trade stuff would be resolved. Going forward, its really striking the tone of these Trade Discussions has changed. Starting with the g7 where the present at the end says how about zero tariffs . Now hes got the germans excited about it. Lets hope that is the discussion but how do we lower instead of raise them. Paul is that the larry kudlow affect . I dont know. This Trump Reminds me of totalt mcgraw. Load the bases at the end of the game and then strike them out was terrifying until the end. [laughter] he isnt looking for
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and auto parts. But that would be put on hold as talks between the u. S. And the eu continue. This is good news for tennessee senator Lamar Alexander who introduced a bipartisan bill to delay the proposed 25 percent penalty. He joins us now. Welcome. Thank you paul. Paul you cheered this truce between the United States and the eu, why . Zero tariffs is exactly the right policy. Thats what we did with the north American Free trade agreement. We implemented nearly 0 tariffs over 15 years. Now that weve got a policy of where were going, zero tariffs, time to get rid of the steel and aluminum tariffs which are driving the cost of cars and hurting the 136,000 tennesseans that work in the automotive industry. Paul you heard wilbur ross say this week that hes still going to go ahead with these investigations. Which basically are designed to show, to answer the question, do cars that are imported pose a National Security threat . Do you think bmws or nissans imported are at all plausibly a National Security threat . Of course they are not. Its wrong for the president to use that pretext. The breadandbutter part of this is of this. Tennessee has become in many ways the number one auto state. Weve got 929 auto parts suppliers. 50 percent of the cars we make here are steel. 10 percent are aluminum. When the price of steel goes up, 40 percent as it has since january, think of what that does to our economy and the jobs in tennessee. We are shooting ourselves in the foot with the tariffs and its time to do with the
president said this week, zero tariffs and the sooner the better. Paul you hear from the companies in tennessee that their costs are going up on their supply chains, they are being disruptive because of the tariffs . Of course i am. You saw this week that ford and general motors, gm has a big plant in tennessee. They announced they each lost 300 million this year. They have to tell that to their stockholders and they attributed most of that to the tariffs. You cant be in the zero tariffs world which is where the president wants to go and raise the price of steel 40 percent and still make cars and trucks in tennessee that are competitive to sell in the United States or export around the world, which we do a lot. Paul how many cars are made in tennessee remark youve got a nissan plant and a volkswagen any gm plant. How many of those cars are exported outside the united
states . I dont know the exact number but its billions of dollars of cars that are exported. And billions of parts are exported. The real employment in our state is with the 900 auto parts suppliers. The way you make automobiles, a nissan rogue will go back and forth with its parts to canada, mexico and back to tennessee before its finally built. That permits it to be built in a competitive way at a low cost and sold successfully here and exported around the world. Paul your colleague bob corker has introduced a bill with other colleagues to take back some of the president s authority to use 232 and that National Security definition to impose tariffs. He hasnt been able to get a vote on that with some of your colleagues in the senate. Why not . Getting a vote on anything is hard in the senate. I am the cosponsor of that bill. I think the visits weve had with the president , senator corkers bill, my bill, all of the activity weve had in the senate to say tariffs are shooting ourselves in the foot. Really shooting ourselves in both feet. We have a Trade Problem but the way you solved it is not to shoot yourself in the foot. You find some other way to deal with it. Now that the president has said lets go to zero tariffs, which is the same thing japan and china are doing with each other. Same thing we did with the nafta. I think weve had our impact and i suspect well get a vote as time goes on. Paul the president also saying trying to renegotiate nafta. Whats your advice on nafta . Are using lets close this negotiation so we can have a vote this congress . Yes. Lets get it done before september. Nafta has been good for
tennessee. Weve doubled the amount of cars and jobs and its been good for the United States in my opinion. The president disagrees with that. We are making about as many cars in the United States today as we did when nafta was signed in 1944. The only difference is, weve had 3. 5 million jobs shift not overseas but from the midwest to tennessee and other states in the southeast because of right to work and its more competitive. My advice would be finished the work on nafta. Modernize it. That can be done. Get it done by september and give us a signal about where these tariffs are going. We need an end to shooting ourselves in the foot. Thats a good way to solve a problem. Paul senator, i appreciate you being here. Still ahead, immigrants are
stepping up the rhetoric and stepping up the rhetoric and the Delay Tactics on a bid alright, i brought in new max protein. To give you the protein you need with less of the sugar you dont. Ill take that. [cheers] 30 grams of protein and 1 gram of sugar. New ensure max protein. In two great flavors. New ensure max protein. I wok Harmonica Interrupts ld. And told people about geico. Harmonica Interrupts how they could save 15 or more by. Harmonica Interrupts . By just calling or going online to geico. Com. Harmonica Interrupts sighs and chuckles sorry, are you gonna. Harmonica Interrupts everytime. Geico. 15 minutes could save you 15 or more on car insurance. Im here to call on folks to understand that in a moral moment, there is no neutral. In a moral moment, there is no bystanders. You are either complicit in the evil, you are either contributing to the wrong or
you are fighting against it. Paul that was new jersey democrat this week rallying the opposition to Supreme Court nominee Brett Kavanaugh. Democrats are stepping up the rhetoric and digging in for what they hoped would be a protracted fight demanding access from millions of documents from cavanaughs years in government including his time as Staff Secretary in the bush white house. Mitch mcconnell says despite the democratic Delay Tactics, he will get a vote on the senate floor before the midterm elections. We are back with bill, are the Democrats Making Headway against Brett Kavanaugh . I dont think so. They think they can Brett Kavanaugh. Its a different situation. It was 45 minutes after the announcement was made the white house was unprepared, the judge was on prepares it i think the attacks may be nastier but theres a hint of desperation. As long as the republicans hang together, he will be confirmed. They might get oneto democratic votes because the democratic in the trump seats might be more and then those against him. Paul this document requesting they want all the documents for his time during the bush white house. That is a clearinghouse for the president. All of the documents coming through him and he make sure the president sees them and theyre in the shape the president wants them. Should the senate have the right to see all of those . No, absolutely not. That is not the precedent. We have had prior Supreme Courtnominees for whom the Executive Branch have said some things ar