Recently, Joe Lavorgna, a senior advisor to the US Treasury Secretary, expressed optimism about the economic outlook during a television interview. He believes that President Trump’s tariffs have slowed inflation and that if the “One Big Beautiful” bill is passed, it will have a positive impact on the market.
On June 29, Fox Business Channel interviewed Joe Lavorgna, a senior advisor to the US Treasury Secretary, regarding calls from both parties for Federal Reserve Chair Powell to lower interest rates.
Lavorgna stated in the program, “Recent inflation data is very good, not only has it not been affected by any tariffs, but it has actually slowed down significantly.”
He went on to say, “Our current year-on-year headline inflation rate is almost at its lowest level since President Trump’s first term in early 2021, so the inflation data looks very favorable.”
Last Friday, June 27, President Trump expressed dissatisfaction with the current Federal Reserve policy rate of 4.5% during an interview on Fox’s “Sunday Morning Futures” program. He said, “Our rates should be at 1% or 2%, not artificially kept high as they are now.”
In response, Lavorgna stated, “The market, especially the fixed-income market, is broad and deep, and the market does indeed anticipate rate cuts in the coming quarters.”
He expressed a very optimistic outlook for the economy, emphasizing the potential impact of the “One Big Beautiful” bill on corporate investment and inflation.
Lavorgna reiterated that if the bill is passed, it would have a disinflationary effect, leading to strong economic growth and low inflation, similar to the economic characteristics of President Trump’s first term. He emphasized the importance of market rates decreasing with the passage of the bill.
Despite uncertainties surrounding public reception of the bill and concerns about trade agreements, Lavorgna remains optimistic. He stated that ongoing negotiations are progressing smoothly and that the true uncertainty lies within the bill itself. There are many incentive measures in the bill, and if it does not pass, record-breaking tax increases could be expected next year, potentially causing an economic downturn.
He believes that the bill will provide clarity and certainty to individuals because businesses need to know what the future tax system will look like. Lavorgna optimistically stated that progress on trade agreements and the passage of the bill will give businesses more reason to invest, contributing to the recent record highs seen in the stock market.
“The Nasdaq 100 has hit a historic high—this index is very sensitive to capital expenditure, so overall, it sends a very positive signal.”