From Brian Wesbury: “‘Core’ GDP (consumption + fixed investment) increased 4.3% in Q3 and is up 4.5% in the past year. Despite widespread pessimism about hurricanes, energy prices, consumer debt, trade deficits, and housing bubbles, the economy continues to grow at a remarkable pace. This is because tax rates remain low, productivity continues to accelerate, and Fed policy is still accommodative.”

From Mike Darda: “Since an inventory drawdown pulled growth down by more than half a percentage point, and the effects of the September storm-related outages probably knocked another half of point off growth, underlying output actually has been running closer to 5% in real terms. Strong underlying trends in the capital-to-labor ratio and corporate profits suggest that both income and corporate spending should continue at a strong pace moving into 2006. This is confirmed by data on tax receipts, which show that tax revenues grew at the fastest pace since 1982 in FY05.”