Former Trump Adviser Has Good News for Joe Biden

Former Trump adviser Gary Cohn has a positive message for President Joe Biden.

Cohn, who served as former President Donald Trump's chief economic adviser from 2017 to 2018 and was a director of the National Economic Council, offered an optimistic view of the U.S. economy on Wednesday, telling CNBC it was back to a normal.

"We haven't seen normal for over two decades," Cohn told correspondent Dan Murphy during the Abu Dhabi Finance Week conference. "We went through a decade plus of zero interest rates, we went through a decade of quantitative easing, zero interest rates and the Fed trying to see if they could create inflation."

Newsweek reached out to the White House via email for comment.

Amid significant pressure at home, the Biden administration has sought to tout the president's economic policy, dubbed "Bidenomics," to celebrate post-COVID-19 pandemic recovery in job growth and consumer spending and to point to the so-far avoided recession. But rising inflation and political attacks from Republicans appear to have stunted the White House's efforts to shift public opinion.

A new Gallup poll released Tuesday showed that Biden's current rating on the economy is only one percentage point higher than his lowest last year, when inflation was at a 40-year high. Even the majority of Biden supporters are disappointed with his handling of the economy. A New York Times survey released Tuesday found that a majority of those who voted for Biden in 2020 say today's economy is fair or poor.

Cohn said that while he does not see the Federal Reserve changing its strict tightening position until the second half of next year, he believes the economy is back to normal and that the reason Americans may not be feel that way is because "we all forgot what normal is."

"We've gone from the Fed not being able to create inflation—we now know the answer, the Fed can't create inflation, but the market can—to us trying to unwind a shorter-term inflationary shock," he said. "We're back into a normal world."

Looking at the 100-year average for the 10-year U.S. Treasury yields, Cohn said "every piece of economic data, if you look, is sort of heading back towards its very long-term average."

In September, the Fed paused its aggressive monetary tightening cycle after more than a year of decisive actions that included raising interest rates to their highest in several decades. The recent rate hikes were a significant shift from the near-zero interest rates maintained during the height of the pandemic. The increases have resulted in higher costs for borrowing for consumers and more expensive financing for businesses.

Tasked with the difficult job of curbing inflation without triggering a significant economic slowdown, the Fed will likely wait some months before bringing interest rates back down, Cohn said.

"You don't want to be early to leave when you're the last one to come to the party," he said. "You have to be the last one to leave the party, so the Fed is going to be the last one to leave this party.

"The economy will clearly turn down before the Fed starts to cut interest rates, so I strongly believe that for the first half of '24, we will see no rate activity in the Fed. Maybe [in the third quarter], we'll start hearing rumblings of some forward guidance of lower rates."