The Clinton Meltdown: Downdraft

THE stock-market decline is sending a message. So are other crucial economic indicators. But both congressional Republicans and the Clinton Administration seem bent on ignoring the looming signs of an economic slowdown. It’s as if Team Clinton, reminiscent of the Nixon Administration in so many other ways, now wants a recession to make the match complete.

Consider the economic landscape. Corporate earnings are now dropping because prices are falling faster than productivity is rising. Productivity-adjusted wages, measured as unit labor costs, are well in hand, rising only 1.3 per cent over the past year. But commodity price indexes have sunk 20 per cent over the past year; hence unit profits have dropped 5 per cent.

About the Author

Larry Kudlow

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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THE stock-market decline is sending a message. So are other crucial economic indicators. But both congressional Republicans and the Clinton Administration seem bent on ignoring the looming signs of an economic slowdown. It’s as if Team Clinton, reminiscent of the Nixon Administration in so many other ways, now wants a recession to make the match complete.

Consider the economic landscape. Corporate earnings are now dropping because prices are falling faster than productivity is rising. Productivity-adjusted wages, measured as unit labor costs, are well in hand, rising only 1.3 per cent over the past year. But commodity price indexes have sunk 20 per cent over the past year; hence unit profits have dropped 5 per cent.