White House issues BOLD prediction as Iran war winds down

Added: 2026-05-17

[00:00:00]And we begin this Sunday morning with President Trump's balancing act. End the war on Iran with its commitment of no nuclear weaponry while growing the US economy and keeping inflation under control despite a 50% spike in the price of oil since the war began. And do so ahead of the midterm elections in November and potentially not lose the majority in the House of Representatives. This past week, the president reiterated what he told me 2 weeks ago that the war is close to being over after sending a letter to Congress on May 1st saying that while Iran remains a threat, the hostilities that began on February 28th have now terminated. Meanwhile, the US economy is growing with better than expected jobs in April. The US economy adding 115,000 new jobs for the month with the unemployment rate holding steady at 4.3% even though gasoline prices are now above $4 a gallon in 49 states and flare-ups remain in the Strait of Hormuz. Here's Treasury Secretary Scott Bessent with me here last week.

[00:01:01]You think oil prices will be lower before the midterm elections?

[00:01:04]Uh I I think oil prices you we we can see in the futures market that oil prices are already lower 3 months, 6 months, 9 months out, but again, you know, Maria, there are hundreds of oil tankers waiting in the Gulf uh to come out. Uh the the US is only blockading Iranian ships.

[00:01:27]The markets are betting that the president will pull it off, remove the threat of a potential nuclear terrorist, and watch oil and gas reverse course later this year, and grow the economy due to the president's agenda of cutting taxes and regulation while increasing oil and gas capacity. Stocks have been surging into uncharted territory since the end of March. The Dow Industrial's up 7% in that timeframe. The S&P 500 and the Nasdaq both at all-time highs with double-digit gains. The Nasdaq up 21.5% on strong corporate earnings and confidence in the president's agenda.

[00:02:00]This week brings several catalysts as the Senate returns from recess and is expected to confirm Kevin Warsh to be the next chairman of the Federal Reserve who would then take over when Chairman J. Powell's term is up this upcoming Friday as well as the April consumer inflation numbers due out this upcoming Tuesday and of course the president's trip to China is still on we are told.

[00:02:22]The Beijing meeting with Xi Jinping planned for May 14th and 15th this week.

[00:02:26]Joining now with a closer look at the president's agenda and the US economy is the National Economic Council director Kevin Hassett. Kevin, great to see you this morning. Welcome.

[00:02:35]>> You too. You too and happy Mother's Day.

[00:02:37]And thank you so much and to you. Let's talk about the backdrop here. It's interesting to see this market keep up strongly even and the middle of a war.

[00:02:47]What is driving the economy and how would you assess growth in the US right now?

[00:02:51]Right, there's a huge difference between what we're seeing in the market right now and what we saw back in the '90s.

[00:02:56]Remember when they called it the dot-com bubble? What's happening is that AI is being folded into the operations of so many companies that they're seeing their profitability and their revenues and even their employment skyrocket. And so we've had a couple of quarters in a row where earnings surprised on the upside more than they ever have and that's why equity markets are going up is because in the end it's the earnings that it described what the price should be and there's an earnings boom going on there's something unlike anything we've ever seen.

[00:03:26]So in terms of the price of oil and gas and this spike, this has to mean higher costs costs for corporate America and for consumers.

[00:03:34]Well, it does in in the short run and and you mentioned Secretary Bessette who follows these numbers, you know, he made a lot of money following these numbers in the past and being able to trade and he says these futures markets are saying that basically once we get the straight open that there's going to be a gusher of oil released from the Gulf and that's going to help put us put prices down relatively quickly. Now, there's a little bit of a time lag from that.

[00:03:57]We've got to get the boats to move from the Persian Gulf to especially Asia where jet fuel prices are so high and that can take a month or two. But, once you know, basically the gusher opens, then we expect that oil prices could drop relatively quickly and certainly ahead of the election. So, what kind of economic growth number would you expect for 2016 and beyond then? Let's let's assume that we do get out of this war fairly soon. What kind of GDP growth number would you expect for the US economy? Yeah, and that that's the thing that we've been working a lot on lately because of the capital spending boom.

[00:04:30]Remember that in March, capital spending went up by 3.3% not at an annual rate.

[00:04:35]So, multiply that by 12 and you're looking at historic capital spending numbers because President Trump with his tax cuts, which are in you know, in getting people to expense, but also onshoring activity is giving us a capital spending boom unlike anything we've ever seen. If you look at how fast the capital stock is growing, that's sort of like how much stuff that we make stuff with is between 5 and 8% right now. If if you divide that by three, that's about how much GDP growth you get out of out of just capital spending.

[00:05:02]We've got productivity growth at 2 and 1/2. I think we really could be looking at numbers north of four, north of five, north of even six because there's so much capital stock growth right now.

[00:05:11]Remember that the 2% number that you saw for GDP growth, the reason why it was 2% and not 4 or 5% was that we imported a record number of capital goods because we're building all these factories. Once we turn those factories on, you're going to see it really growth unlike anything we've seen before.

[00:05:27]Are you expecting Kevin Warsh to be the next chairman of the Federal Reserve within a week?

[00:05:33]100% and when you're talking about how well markets are doing, I think that markets are relieved that Kevin Warsh is coming in, that he definitely has the votes and they're expecting new leadership at the Fed is going to help uh drive lower interest rates over time. I obviously data driven. I'm not putting any pressure on Kevin Warsh, but we we know that he's an extremely smart, confident person who can be uh very convincing when he talks to his colleagues. So, I think the markets are pleased that the sort of soap opera at the Fed is about over and that Kevin Warsh's steady hand is going in there to run the Fed.

[00:06:06]The China trip is on the horizon. We are expecting this to go forward. I'm surprised that this is on, but I guess it's still on. We understand that the CEOs of Boeing and Citigroup are going to be traveling there. What would be victory in your eyes in terms of this trip with uh Xi Jinping?

[00:06:22]Well, you know, I I think there are rumors about who's going. I think that we'll probably see a long list or a pretty long list of people that that attend with the president. The The fact is that President Trump and President Xi have a very close relationships and President Trump puts American workers and American businesses first. I can remember once my friend uh Secretary Harold Lettink uh sort of joked about how he's the most successful soybean salesman in American history.

[00:06:47]And what's going on I think is that we're going to have this this trip with two uh leaders that are extremely close with one another and we're going to be making deals. Exactly how those deals look will depend on, you know, how the meetings progress, but my expectation given the strong relationship between the two presidents is that there'll be lots of good news for American workers and firms.

[00:07:06]All right. Uh before you go, Kevin, what do you want to say about AI? You mentioned AI a moment ago. That may very well be on the list of topics for uh President Trump and Xi Jinping, but there's a worry around this anthropic breach recently that perhaps hackers can get uh into our bank accounts uh faster than the institutions can stop it and put patches up. What are you working on with regard to security around artificial intelligence right now? Well, there there's a large public private effort that's being led by uh cyber director Shawn Karen Cross and also uh uh Bessen on the financial sector side.

[00:07:42]and what they're doing is that they're uh studying carefully how to make sure that AI in America maintains its global leadership, uh and we at the same time keep people safe. And that's what they're doing, and uh they're doing it very effectively, as you can see.

[00:07:57]All right, Kevin. Good to have you this morning. We so appreciate your time.

[00:08:00]Thank you. National Economic Council Director Kevin Hassett at the White House. Thank you, Kevin.

[00:08:05]>> Thank you. Be sure to like and subscribe for all the Fox News latest on YouTube and catch full shows streaming now on Fox 1.