Bush Boom Continues [Larry Kudlow]
There is no recession.
Despite all the doom and gloom from the economic pessimistas (me: I can't tell you how much I loathe the nonsensical practice, usually by conservatives, of adding "istas" as a suffix as a method of belittling or demeaning those with the temerity to disagree with them), the resilient U.S economy continues moving ahead—quarter after quarter, year after year—defying dire forecasts and delivering positive growth. In fact, we are about to enter the seventh consecutive year of the Bush boom.
The pessimistas are a persistent bunch. In 2006, they were certain a
recession was just around the corner. They were wrong. Instead, the
economy posted two consecutive quarters of near or above four-percent
Earlier today, a doom and gloom economic forecast from Macro Economic Advisors was released predicting zero percent growth in the fourth quarter. This report is off by at least two percentage points. These guys are going to wind up with egg on their faces.
Here are the facts: Americans are working. The 4.7 percent unemployment number remains at an historical low. On a three-month rolling basis, the U.S. economy has added over 100,000 jobs. Meanwhile, the household job count shows that an average of 303,000 jobs have been added in the last three months. This is noteworthy because it suggests that the job market is turning around.
Hours worked are growing more than 1-percent annually, while workers' wages are running 3.8 percent, a full percentage point ahead of inflation. As for this week's productivity report, it was nothing short of spectacular: the 6.3 percent productivity gain was the best in four years. A rise in productivity is good for growth. It's good for profits. And it's good for low inflation.
Speaking of inflation, business inflation is down from 3.5 percent just
over a year ago to 1.5 percent today. Meanwhile, oil prices have retreated to $88. And, to top it all off, last night we received a tremendous new number showing household net wealth has headed even higher. It stands at a record $59 trillion dollars. That's more than seven percent above a year ago.
Another factoid worth considering is that mortgage refinancings are soaring at lower rates. Since June, they are up nearly 70 percent, while mortgage rates on 15 and 30-year loans are down nearly a 100 basis points. That is a very positive, very welcome development that ought to cushion the plunge in home sales, and maybe even prices.
Down in Washington, Democrats are stuck with a Keynesian message of
economic pessimism, spending increases, and tax hikes to finance their big government proposals. Unfortunately, they still refuse to acknowledge that tax rates have a profound effect on behavior. This kind of tax and spend, big government, Walter Mondale approach may come back to haunt them at the polls next year.
The GOP, on the other hand, has a positive supply-side message
of limited government, lower spending, and lower tax rates. And while it's true that the recent Republican-led Congress failed to adhere to its fiscal lodestars, the statute of limitations is quickly running out on that score.
Incidentally, Democrats have not offered a single spending cut proposal
during their time at the helm. Not one. That's just one reason why—not to mention what I expect to be continuing growth in 2008— I believe the economic pendulum will soon swing in favor of the GOP.
There's no recession coming.
The pessimistas were wrong. It's not going to happen. At a bare minimum, we are looking at Goldilocks 2.0. (And that's a minimum). Goldilocks is alive and well. The Bush boom is alive and well. It's finishing up its sixth consecutive year with more to come. Yes, it's still the greatest story never told.
12/07 08:18 PM
All emphasis added by me. This is the problem when you have someone with an agenda, or rather a humongous axe to grind, playing at analysis. His desire to present the Republicans in the best light possible, instead of objectively analyzing the economic trends, blinds Mr. Kudlow to reality.
Dismissing the Democrats as Keynesians, when the biggest Keynsian presidents we've had in the last fifty years were Nixon & W, is laughable in its disregard of simple facts and recent history.
Also his attempt to give Republicans a pass for their profligacy (And while it's true that the recent Republican-led Congress failed to adhere to its fiscal lodestars, the statute of limitations is quickly running out on that score.) is equally laughable. So when Republicans are in the minority, they are staunch defenders of their fiscal lodestars, yet for the fourteen years while they were in the majority, six of which they shared with the Executive branch, is when they strayed off the reservation. What the hell good is it to have "fiscal lodestars" if you drop the ball at exactly the moment it matters?
And why is the statute of limitations running out on that score? Where is that statute? I'm going to remember it for the rest of my life. At least Democrats say they're going to spend like crazy. No, the Democrats have not offered a single spending cut proposal. That's not what they do. Republicans are the one's who are supposed to do that. But when neither party will, you may as well elect the people who are going to be honest about it.
The most important lesson of all, especially when getting economic or fiscal advice: consider the source and consider his grudge.
It's amazing how much can be gotten wrong in such a brief post.