Kudlow’s Money Politics

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 CNBC’s senior contributor. His new book is JFK and the Reagan Revolution: A Secret History of American Prosperity, written with Brian Domitrovic.

Most Popular

Sports

The Dominant-Sport Theory of American Politics

I think it’s safe to assert that President Trump has an unfortunate tendency to do and say (and tweet) embarrassing things. When he does, we all join in the condemnation, and often it’s not so much for the substance as for the style. The president of the United States should be dignified, measured, slow to ... Read More
World

Why Does Russia Build So Many Doomsday Weapons?

While America’s ruling and chattering classes were chasing Moose and Squirrel, back on planet Earth the Russians have been busy building a doomsday bomb. As Vladimir Putin alluded to in his March 1 address to the Federal Assembly, the Russians have developed, among other “superweapons,” a Doomsday ... Read More
World

Enoch Powell’s Immigration Speech, 50 Years Later

The 20th of this month marks a significant anniversary in Britain. For it is the 50th anniversary of what is probably the most famous -- and certainly the most notorious -- speech by any mainstream politician since the war. On April 20, 1968, Enoch Powell gave a speech to the Conservative Political Centre in ... Read More
Economy & Business

A Trump Trade and Economic Doctrine

If the Treasury Department’s recent semiannual report is any guide, the Trump administration still doesn’t quite get it when it comes to trade imbalances. “The US government has all the tools it needs to achieve balanced trade without risking a trade war,” writes Joseph Gagnon for the Peterson Institute ... Read More
Politics & Policy

The Comey–Trump Dance

I never thought the Comey book would make much news for the simple reason that it would be outrageous if it did. If Comey knew something relevant and important about the Russia investigation that we didn’t already know, he couldn’t possibly put it in his book. Let’s say he did have something big on the ... Read More