House Ways and Means Committee Chairman Kevin Brady said Monday’s stock-market sell-off wasn’t unexpected, telling reporters the correction is reflective of a stronger economy following the passage of tax reform.
While the Dow was down 1,179 points at closing bell, the Texas Republican argued the markets were likely reacting to the probability the Federal Reserve will increase interest rates due to inflation, noting the recent acceleration in wage-growth numbers and payroll numbers signal the economy is on the right path.
“It reinforces that tax reform is growing this economy. So, wages are increasing, which they haven’t for more than a decade — that’s a good thing,” Brady said Monday. “And so that is a part of the inflation, and then the second concern from Wall Street appears to be the Fed normalizing its interest rate — something that everyone has said is long overdue and a signal of a stronger economy, one that one can assimilate those interest rate increases.”
Brady said the actions of Jerome Powell, the newly-minted Federal Reserve chairman, in conjunction with results seen from the GOP’s tax overhaul will play a major factor in what happens to the markets.
“I think the correction really represents the opposite of my pet peeve over the last number of years, which is every month and every quarter when the economy’s economic projections were slow, the market would rally, because interest rates wouldn’t be going up,” he continued. “That always seemed puzzling to me — I think it’s healthy that they now see we are going to normalize these areas.”
President Donald Trump touted the impact tax reform is having on the economy while touring a manufacturing company in Ohio earlier in the day. The administration said the president is committed to supporting pro-growth policies.
“The president’s focus is on our long-term economic fundamentals, which remain exceptionally strong, with strengthening U.S. economic growth, historically low unemployment, and increasing wages for American workers,” White House press secretary Sarah Sanders said in a statement. “The president’s tax cuts and regulatory reforms will further enhance the U.S. economy and continue to increase prosperity for the American people.”