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Kudlow’s Money Politics

Larry Kudlow’s daily web log of matters political and financial.

Goldilocks Rules



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Liberal New York Times columnist Paul Krugman took it on the chin today as the November jobs report was stronger than expected and increased by 132,000. The unemployment rate stayed at a historically low 4.5 percent.

The Goldilocks economy is producing large job gains in services’”think retailers, healthcare, financial companies, business, professional and other areas.

Housing and manufacturing are still soft after two years of tight money from the Fed, and of course, higher energy prices have dampened things until recently. But the housing and manufacturing sectors are really just about 10 percent of our GDP. That means 90 percent is still hitting on all cylinders.

Even softer homes prices couldn’t hold back a new record gain in family net wealth. This hit another all-time high of over $54 trillion dollars on the strength of the roaring stock market.

Incidentally, that Goldilocks stock market is pointing to a solid growth rate in 2007.

And, let’s not forget, over the past 12 months, workers wages are up 4.1 percent. That development, along with lower gasoline prices and a negative CPI, suggest middle income families will have plenty of spending power this Christmas holiday season.

Oh by the way, did I mention lower tax rates on capital gains and dividends have helped drive stocks and the economy higher?

Mr. Krugman’s model doesn’t include supply-side tax cuts.

President George W. Bush will look with satisfaction at today’s employment numbers. He will realize once again the important connection between lower marginal tax rates and a strong economy.


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