The Corner

Goldilocks Lives

Today’s upwardly revised GDP report shows that Goldilocks lives.

Strong business investment, solid consumer spending, unbelievably high profits, and much lower inflation.

In fact, inflation fell from 3.3 percent in Q2 to only 1.7 percent in Q3. Profits are up 31 percent over the past year. GDP was revised up from 1.6 percent in the advance report to 2.2 percent, which leaves year on year of 3.0 percent.

Obviously, the economy is slowing after 2 years of Fed tightening, along with higher oil prices. And just as obvious is that the housing slowdown is taking roughly 1 percent off of GDP.

But our free-market, capitalist, economy is resilient, durable and flexible—especially when bolstered by low marginal tax rates on investment—a point that the MSM never talks about.

So, the soft landing scenario is intact. That’s what the stock market has been telling us over the past four months. The Reagan economic policy of low tax rates to promote growth and monetary control to hold down inflation is very much in place right now.

Next year’s economy will move back towards trend growth of around 3 percent or more. Markets are smarter than econometricians. The bond market is predicting low inflation while the stock market is predicting continued economic growth.

Larry Kudlow — Larry Kudlow is the author of JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

Most Popular

Politics & Policy

The Origins of Progressive Agony

What has transformed the Democratic party into an anguished progressive movement that incorporates the tactics of the street, embraces maenadism, reverts to Sixties carnival barking, and is radicalized by a new young socialist movement? Even party chairman Tom Perez concedes that there are “no moderate ... Read More
Elections

How Will the Senate Races Break?

How will the Senate races break? We have less public polling to go on than in recent years, so answering that question is harder than ever. But the news is more optimistic for Republicans than it was a month ago.   Waves and Breakers Four years ago, I projected in mid September that if “historical ... Read More
U.S.

The Media Fell for Elizabeth Warren’s Spin

Do you want to know what media bias looks like? Earlier today, Massachusetts senator Elizabeth Warren released DNA test results that confirmed that she misled employers, students, and the public about her Native American heritage for years. Bizarrely, all too many members of the media treated the results as ... Read More