CNBC Transcript: National Economic Council Director Larry Kudlow on CNBC's “Squawk on the Street” Today

Following is the unofficial transcript of a FIRST ON CNBC interview with National Economic Council Director Larry Kudlow on CNBC's "Squawk on the Street" (M-F 9AM - 11AM) today, Friday, June 1st. Watch video from the interview on CNBC.com here.

CARL QUINTANILLA: BACK TO THE JOBS NUMBER THIS MORNING. UNEMPLOYMENT OF COURSE HITTING AN 18-YEAR LOW. STOCKS RALLY THIS MORNING. FIRST ON CNBC DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL LARRY KUDLOW JOINS US FROM THE WHITE HOUSE. LARRY, IT'S GOOD TO SEE YOU AGAIN. GOOD MORNING.

LARRY KUDLOW: GOOD MORNING, CARL. THANK YOU.

QUINTANILLA: THE PHRASE, "BEATS ACROSS THE BOARD," WAS SAID AFTER THE PRINT. I GUESS YOU AGREE.

KUDLOW: YES. GREAT NUMBER. 223. IT WAS NEAR CONSENSUS, MAYBE SLIGHTLY ABOVE CONSENSUS. LOOK, IT'S A STRONG ECONOMY. I MEAN, YOU KNOW, WE'VE HAD THIS DEBATE FOR OVER A YEAR - ONE HAT OR ANOTHER THAT I'VE BEEN WEARING. AND YOU KNOW, WHAT YOU'VE GOT HERE IS CONTINUED JOB GROWTH, LOW UNEMPLOYMENT, PARTICIPATION RATES -- PRETTY GOOD, WAGES ARE STILL RISING, GDP -- REAL GDP IS RUNNING PRETTY MUCH CLOSE TO 3%. WE'RE LOOKING FOR A STRONG SECOND QUARTER. PROSPERITY. THIS IS A PROSPERITY ERA. I BELIEVE, AS YOU'VE HEARD ME SAY THIS BEFORE, I BELIEVE WE'VE ENTERED INTO THE LONGEST LARGEST PROSPERITY IN A COUPLE OF DECADES. I KNOW IT'S EARLY IN THE GAME. I KNOW THE DATA IS NOT SUFFICIENT YET TO MAKE THAT CLAIM. BUT I'M TRYING TO GET IN FRONT OF THE CURVE AND GIVE YOU MY VIEW AND THE VIEW OF THE ADMINISTRATION.

QUINTANILLA: WHERE IS THE CURVE, LARRY? WHEN DO THE WAGES GET TO A POINT WHERE THEY GET PEOPLE BACK IN THE LABOR FORCE, RIGHT? JUST LOOKING FOR A JOB AGAIN.

KUDLOW: WELL, YOU KNOW, IT DEPENDS ON THE - ON THE LABOR REPORT AND JOBS JOBS REPORT THIS MORNING, I THINK IT WAS 2.7% AVERAGE HOURLY EARNINGS. SO, OKAY, WE'RE INCHING TOWARD THREE WHICH IS A GREAT NUMBER. THERE'S VIRTUALLY NO INFLATION. OTHER MEASURES, BY THE WAY, THE EMPLOYMENT COST INDEX IS ACTUALLY RUNNING UPWARDS TOWARDS 4% GROWTH, SO WE'LL HAVE TO SEE HOW THIS WORKS OUT. LOOK, THERE'S NO QUESTION. HERE'S A KEY POINT REGARDING THE TAX CUTS AND THE DEREGULATION. BUSINESS IS COMING ALIVE. BUSINESS INVESTMENT. WHAT WE CALL CAPEX. THIS IS COMING ALIVE. IT WAS FLAT IN 2015. IT WAS FLAT IN 2016. IT WAS UP SIGNIFICANTLY IN 2017. HERE IN THE SPRING OF 2018 MOST OF THESE NUMBERS FOR CAPEX ARE SHOWING, WHAT - SIX, SEVEN, SOMETIMES 8%. THE ISMs ARE ROARING. SO I SAY THAT ONLY TO SAY, IF YOU'RE GOING TO INVEST -- EQUIPMENT, TECHNOLOGY, BUILDINGS, WHATEVER --THE DEMAND FOR LABOR GOES UP AND THEIR WAGES GO UP. AND I THINK WE'RE AT THE BEGINNING OF THIS CYCLE, CARL. I DON'T THINK WE'RE ANYWHERE NEAR THE END. WE'RE AT THE BEGINNING. THIS COULD GOING ON FOR A BUNCH MORE YEARS, IN MY JUDGMENT.

JIM CRAMER: LARRY, IT'S JIM. I TOTALLY AGREE WITH YOU. I MEAN, I THINK IT'S -- THIS IS ONE OF THE GREAT BOOMS I'VE EVER SEEN. IT'S A NONINFLATIONARY BOOM. IS THIS NOT ONE WE SHOULD TAKE IT TO OUR SO CALLED TRADING PARTNERS. THAT WE SHOULD GO TO THE GERMANS AND SAY, YOU KNOW, "YOU CAN'T JUST KEEP BUILDING PLANTS IN MEXICO AND GETTING AROUND THE RULES TO THE JAPANESE. WE ARE STRONG. THEY'RE NOT." ISN'T THAT WHEN YOU STRIKE, ISN'T THAT WHEN YOU GET YOUR POINT DONE?

KUDLOW: YOU KNOW, JAMES, THAT IS A VERY GOOD POINT, OKAY? YOU AND I, ONCE AGAIN, ARE ON THE SAME PAGE. MY PLEASURE. LOOK, FIRST POINT, WE'RE GOING TO GO UP TO THE G7 SUMMIT NEXT WEEK -- THE LEADER SUMMIT. I THINK PRESIDENT TRUMP HAS A RIGHT, YOU KNOW, IN A MODEST WAY BUT WE'VE DEVELOPED AN EXPERIMENTAL POLICY HERE. LOW TAX RATES, LOWER REGULATIONS, NO PUNISHING BUSINESS. LET'S REWARD SUCCESS, TAKE A RIP AT THE BALL, THAT'S AMERICAN CAPITALISM, ENTREPRENEURSHIP. SO THE OECD JUST PUBLISHED NUMBERS, JIMMY, THAT SAID THE UNITED STATES ECONOMY IS NOW GROWING FASTEST IN THE WORLD. I'M SEEING DOWNTURNS -- MILD DOWNTURNS IN EUROPE AND ASIA. THEY SHOULD CONSIDER, I SAY THIS WITH MODESTY, BUT OUR EUROPEAN FRIENDS AND OTHERS SHOULD CONSIDER THESE SUPPLY SIDE KINDS OF POLICIES. TO REAWAKEN BUSINESS. AND IF THEY DO, THEY WILL COME OUT OF THEIR DOLDRUMS AND THEY'LL GET THE KIND OF CAPITAL INVESTMENT AND BUSINESS INVESTMENT AND THAT GENERATES THE PROSPERITY FOR JOBS AND WAGES. YOU KNOW, I THINK IT REMINDS ME GOING BACK A WHOLE BUNCH OF YEARS WHEN I WAS HERE WORKING FOR RONALD REAGAN, 1983, WE WENT TO THE G7 MEETING. THE AMERICAN ECONOMY FINALLY EXPLODED. A LOT OF THOSE GUYS WHO HAD MOCKED REAGAN THE YEAR BEFORE SAID, "WAIT A MINUTE. TELL US AGAIN HOW YOU DID THIS. WHY DO YOU HAVE AN ECONOMIC MIRACLE?" AND IN SOME WAYS THIS IS THE SAME STORY. WE WOULD WELCOME THE EUROPEANS TO FOLLOW OUR LEAD AND, BY THE WAY, PRESIDENT WOULD WELCOME THE EUROPEANS TO ENGAGE US IN A SERIOUS MATTER WITH RESPECT TO A LOT OF UNFAIR TRADING PRACTICES. I KNOW THEY'RE OUR FRIENDS, I KNOW THEY'RE OUR ALLIES. OKAY? WE GET THAT. ON THE OTHER HAND, WHEN THE PRESIDENT SAYS HE WANTS RECIPROCITY ON TARIFFS AND NONTARIFFS, WHEN THE PRESIDENT WOULD LIKE SOME REASSURANCE WITH RESPECT TO THE PRODUCTION OF STEEL, WHEN THE PRESIDENT WOULD LIKE THEM TO JOIN US WITH RESPECT TO CHINA TO TRY TO RIGHT ALL THEIR WRONGS, WE WOULD LIKE SOME COOPERATION. AND WE HAVEN'T REALLY HAD THAT KIND OF COOPERATION YET. AND I REALLY WANT TO MAKE THAT POINT. IF THERE CARS - IF THEY TAX AMERICAN IMPORTS, AUTO IMPORTS AT 10% AND WE TAX THEIRS AT 2.5%, THAT'S WRONG. THEY SHOULD GO TO 2.5. IN FACT WE SHOULD BOTH GO TO ZERO. LET'S LOWER THE BARRIERS. AND IT'S NOT JUST AUTOS. IT'S A BUNCH OF OTHER INDUSTRIAL PRODUCTS AND FINISHED GOODS, AND THAT INCLUDES STEEL. I'M JUST SAYING, "LOOK, LET'S TALK." IF YOU READ THE STATEMENTS YESTERDAY WE ARE IN CONVERSATION. THIS IS SOMETHING OF A FAMILY DISAGREEMENT. IT'S A TRADE DISCUSSION. IT'S NOT A TRADE WAR. IT'S A TRADE DISCUSSION. WE CAN FIX THIS, BUT WE'RE GOING TO NEED THE HELP OF OUR FRIENDS. OKAY? AND OUR MODEL IS WORKING AND THEIR MODEL IS NOT.

CRAMER: WELL, LARRY - WHY DON'T WE -- ONE OF THE THINGS I THINK THAT THE AMERICAN PEOPLE KIND OF DAWNING ON THEM 00 I KNOW YOU KNOW FROM THE YEARS I WORKED WITH YOU -- THEY NEED US MORE THAN WE NEED THEM. AND I WISH YOU WOULD MAKE THAT POINT MORE. BECAUSE I DON'T THINK PEOPLE REALIZE HOW DEPENDENT THESE SO-CALLED STRONG COUNTRIES ARE ON OUR MARKETS.

KUDLOW: YOU KNOW, MODESTY PREVENTS ME FROM MAKING EXACTLY THAT KIND OF STATEMENT. ON THE OTHER HAND, SINCE YOU AND I FRIENDS AND FORMER PARTNERS, I MUST SAY -- YOUR STATEMENT IS CORRECT. OK. YOU SAID IT. THANK YOU FOR THAT VERY MUCH. YOU WERE THE MORE ARTICULATE OF THE TWO OF US. SO I'M QUITE HAPPY. LOOK, I'LL PUT IT TO YOU THIS WAY, JOIN US. JOIN US.

DAVID FABER: LARRY, IT'S DAVID. BACK TO THE NUMBERS THEMSELVES. THIS MORNING, THE POOL OF AVAILABLE WORKERS FELL BY ANOTHER 213,000. I THINK THE RATIO BETWEEN JOB OPENINGS AND POOL OF AVAILABLE WORKERS IS THE LOWEST IT'S BEEN IN 18 YEARS. IS IT A GOOD TIME THEN TO BE CRACKING DOWN IMMIGRATION OR IS THAT SOMETHING THAT CONCEIVABLY COULD END UP SLOWING GROWTH?

KUDLOW: WELL YOU KNOW, ON THE IMMIGRATION STUFF, DAVID, WE ARE LOOKING AT WAYS TO BRING TEMPORARY IMMIGRANTS WITH TEMPORARY VISAS LEGALLY INTO THE UNITED STATES IN A NUMBER OF INDUSTRIES. I DON'T WANT TO GET AHEAD OF THE CURVE, BUT YOUR POINT IS WELL TAKEN. SO WE ARE LOOKING AT THAT. WE'RE LOOKING AT INVESTORS, FOR EXAMPLE, WITH THE SAME IDEA. THE GENERIC ISSUES, YOU KNOW, YOU GOTTA BACK - I BACK THE PRESIDENT ON THIS. WE'VE GOT TO FIX THIS BROKEN SYSTEM. IT'S PROBABLY GOING TO REQUIRE A WALL OR SOME KIND OF BORDER OPERATION. THINGS LIKE SANCTUARY CITIES. THAT'S ALL GOT TO BE CHANGED. IT'S TOTALLY UNACCEPTABLE. BUT I DID THINK YOUR POINT IN THE NEAR TERM WHILE WE WRESTLE WITH OUR FRIENDS IN CONGRESS, I THINK YOU'RE GOING TO SEE SOME PROGRESS ON THAT VERY POINT. NOW HAVING SAID THAT, DAVID, JUST ONE QUICK ADD ON: I THINK AS WAGES GO UP IN THE BOOMING ECONOMY, MORE PEOPLE WILL COME OUT OF THE WOODWORK AND INTO THE LABOR MARKETS. I BELIEVE THAT'S GOING TO HAPPEN. THERE'S SOME EVIDENCE IT'S ALREADY STARTED TO HAPPEN. SO YOU'VE JUST GOT TO GIVE IT A LITTLE BIT OF BREATHING ROOM. I THINK THERE ARE A LOT OF AMERICANS OUT THERE WHO WOULD LOVE TO WORK IF THE PRICE IS RIGHT AND THE JOB IS RIGHT. AND, YOU KNOW, DOING EVERYTHING WE CAN. MS IVANKA TRUMP HAS A WHOLE JOB TRAINING PROGRAM THAT WE'RE GOING TO HEAR ABOUT AT LUNCH TODAY. A LOT OF PEOPLE REALLY LIKE THAT KIND OF THING. SO WE'RE DOING WHAT WE CAN TO ATTRACT THE LABOR FORCE, MAKE IT A BETTER EDUCATED LABOR FORCE, AND PUT IT TO WORK.

QUINTANILLA: FINALLY, LARRY, SARAH HUCKABEE SANDERS TELLS OUR EAMON JAVERS, THE PRESIDENT - IT WAS APPROPRIATE TO HAVE THE TWEET THIS MORNING BECAUSE HE DIDN'T GIVE AWAY THE NUMBER. THE TEN YEAR DID MOVE A BIT. AND SOME PEOPLE WONDER IF IT SETS A PRECEDENT NOW. DO WE LOOK FOR HIM TO SEE IF HE TWEETED OR NOT IN ADVANCE OF THE PRINT EVERY MONTH?

KUDLOW: YOU KNOW, MY RESPONSE TO THAT IS, EAMON -- CARL, BY LAW AND CUSTOM, THE WAY THESE THINGS WORK, JUST TO CLEAR THE AIR, THE CHAIRMAN OF THE CEA, IN THIS ADMINISTRATION MY PAL KEVIN HASSETT - THE CHAIRMAN OF THE CEA GETS THE NUMBERS LATE IN THE AFTERNOON, EARLY IN THE EVENING BEFORE. HE SHARES THOSE NUMBERS WITH THE DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL. IT'S MY CALL WHETHER TO SEND THEM OVER TO THE PRESIDENT, TO GIVE HIM A CALL OR HAVE A MEETING WITH HIM. THAT'S JUST WHAT I DID LAST EVENING. OKAY. I TRACKED HIM DOWN ON AIR FORCE ONE. I WANTED HIM TO KNOW THE NUMBERS. BY LAW AND CUSTOM, THAT IS CORRECT. HE HAS A RIGHT TO KNOW. HE'S THE COMMANDER IN CHIEF. THAT'S ALL. HE CHOSE TO TWEET HIS TWEET BASICALLY SAID LIKE EVERYBODY ELSE, WE AWAIT THE JOB NUMBERS. YOU CAN READ INTO THAT ABOUT TEN DIFFERENT THINGS IF YOU WANT TO READ INTO IT. THE NUMBERS THEMSELVES CAME OUT ABOUT CONSENSUS. SLIGHTLY MORE. THAT'S GOOD NEWS I DON'T HE GAVE ANYTHING AWAY INCIDENTALLY AND I THINK THIS IS ALL ACCORDING TO ROUTINE, AS I SAY, LAW AND CUSTOM. BY THE WAY, CARL, WHEN I WAS HERE WHATEVER 35 YEARS AGO, EXACTLY THE SAME SYSTEM. I WAS IN OMB IN THOSE DAYS. THE CEA SENT THE NUMBERS TO OMB AND WE DECIDED WHETHER TO ALERT THE PRESIDENT OR NOT. IT REALLY HASN'T CHANGED.

QUINTANILLA: LARRY, WE KNOW YOU GOT TO GO, BUT REAL QUICK. WILBUR ROSS YESTERDAY SAID HE WAS GOING TO CHINA WHEN WE HAD HIM ON BUT THERE'S QUESTION TODAY. DO YOU KNOW WHETHER IN FACT THE PLAN IS FOR COMMERCE SECRETARY ROSS TO GO TO CHINA TO NEGOTIATE ON TRADE?

FABER: YOU KNOW THAT -- I DON'T KNOW WHERE WILBUR IS. I HOPE HE'S ON HIS WAY TO BEIJING OR I HOPE HE'S IN BEIJING. I DON'T HAVE HIS SCHEDULE. I KNOW HE INTENDED TO GO. I HAVEN'T HEARD ANYTHING TO THE CONTRARY BUT I'M NOT THE GUY WHO HOLDS HIS SCHEDULE. I THINK BY THE WAY, IF COMMERCE SECRETARY ROSS, WHO IS A VERY DISTINGUISHED COMMERCE SECRETARY, IF HE GOES OVER THERE, I THINK SOME GOOD WILL COME OF IT. BUT HERE, TOO, LISTEN TO THE PRESIDENT. BELIEVE WHAT THE PRESIDENT SAYS. HE'S QUITE SERIOUS ABOUT CHANGING UNFAIR AND ILLEGAL TRADING PRACTICES AND PROTECTING AMERICAN TECHNOLOGY. I MEAN, FOLKS SHOULD LISTEN TO WHAT HE IS SAYING BECAUSE HE MEANS IT. BELIEVE IT. AND IF HE DOESN'T GET IT HE WILL TAKE ACTION. I THINK THAT'S ONE OF THE IMPORTANT PARTS OF THIS ENTIRE STORY.

QUINTANILLA: LARRY, WE ALWAYS LOVE SEEING YOU AFTER THE JOBS NUMBER. THANKS SO MUCH. HAVE A GOOD WEEKEND.

KUDLOW: YOU, TOO.

QUINTANILLA: LARRY KUDLOW, DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL.

To post a comment, you must register and login.