Tax cuts and deregulation can help the U.S. economy grow faster than the recent pace of about 2 percent, even with unemployment at a the lowest level since 2001, National Economic Council Director Gary Cohn said.

“We’ve had a couple good quarters of GDP, but we’re still not on a sustainable level of growth that we should be and want to be,” Cohn said in an interview with Bloomberg Television on Friday. “We believe we can have 3-plus percent growth with taxes and the regulation reform that we’re after now.”

White House economic adviser Gary Cohn
White House economic adviser Gary Cohn Andrew Harrer/Bloomberg

Payrolls declined by 33,000 in September in the aftermath of Hurricanes Harvey and Irma, according to a Labor Department report released earlier. But other parts of the report still pointed to a strong job market. Wages increased 2.9 percent from a year ago, unemployment reached a 16-year low of 4.2 percent and the labor-participation rate edged up. Economists cautioned against reading too much into the report because of the impact from the storms.

Cohn said the administration is “very excited about the numbers” and views them as further evidence that President Donald Trump’s economic policies have created gains for workers. But there’s more potential to be tapped, he said.

“We believe there are more workers willing to come into the workforce,” Cohn said. “We believe that the tax cut is essential to continue the economic growth that we’ve started.”

Cohn, who is reportedly on a shortlist of possible candidates to be Federal Reserve chairman, declined to comment about the search process.

Bloomberg News