White House economic adviser Larry Kudlow believes that the recent stock-market downturn is due to the business community’s nervousness about the outcome of next week’s midterm elections.
“Inside this correction someplace is some nerves about the election,” Kudlow said at a Washington Post event Thursday. “Small business and all business and frankly the workforce is enjoying a very strong economic boom, which is quite unexpected.”
The NASDAQ dropped 9.2 percent last month, making October the worst month for the market since November 2008, when it sank 10.8 percent.
Kudlow said he is confident that the current correction is not the start of a “long-term downturn” and blamed it in part on Democrats.
A Democratic majority in the House after Tuesday’s midterm congressional elections could usher in more regulations, red tape, a reversal of President Trump’s energy policies, and higher taxes, all of which worry businesses, Kudlow argued.
“I doubt it very much. The economy’s so healthy right now, and profits are soaring,” he responded when asked whether Trump’s trade wars with China and other foreign economies are responsible for the wobbly market. “Corrections come and go.”
“My crystal ball is not at all clear,” Kudlow said when asked if Trump would work out his differences on trade with Chinese president Xi Jingping. “The agenda is being discussed and worked on inside both camps.”
Kudlow said he believes the largest tech stocks in the market got “pretty toppy” and were “due for a correction.”
“Our small businesses are soaring. Soaring. They’re killing it,” Kudlow said, adding that small businesses should expect 3 percent growth next year as well.