Kudlow’s Money Politics

Kudlow 101: There Ain’t No Recession

Yesterday’s tremendous ADP jobs report puts the dagger into the very heart of the recession case.

The fact is, America is working.

Look at how close the reports parallel one another. So here’s my point: Jobs aren’t folding. Jobs aren’t plummeting. Jobs are strengthening. Now I’m not smart enough to know what the jobs number is going to be tomorrow, but you could easily have a blockbuster 200,000 jobs report. I don’t know, it could be 150K, it could be minus 600K, but I highly doubt that folks. When you see this kind of ADP report, you’ve got a whole new situation.

Now let’s move on to our second chart’”productivity. The latest productivity report was staggering. In fact, it was the best in four years.

Productivity rising is good for growth. It’s good for profits. And it’s good for low inflation.

Look at our third chart’”business inflation. Guess what folks? It’s falling.

Look at that. Down from 3.5 percent a year ago, to 1.5 percent today.

Finally, a look at financial profits.

After-tax, they are doing better than people think. We’re talking about 300,000 companies here, from the IRS based GDP reports. They are profitable. Sure, S&P financials are down about 35 percent. But NIPA financials are up 8 percent on the year.

So you’re looking at $332 billion of profits in the latest quarter, that’s a little less than last quarter. But it’s $20 billion more than the first quarter, $20 billion more than all of ‘06, and about $60-70 billion more than ‘05.

The point of the story is even if Wall Street takes $200-300 billion in mortgage losses, as a result of loan markdowns, profitability is more than adequate to stem the tide and hold us.

There ain’t no recession.

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

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