Posted on 11/03/2007 11:38:45 AM PDT by fabrizio
If things are so bad, why are they so good?
With all the gloom coming out of Wall Street, the Democrats on the campaign trail, and the mainstream media, a remarkable thing just happened: Real gross domestic product, the best summary report of the American economy, came in at a breathtaking 3.9 percent annual rate for the third quarter. In fact, following the 3.8 percent growth rate for the second quarter, the U.S. economy has posted its strongest quarterly growth in four years. The economy actually appears to be speeding up, following the relatively sluggish performance of the prior 18 months.
On top of this, the inflation rate is actually slowing down. The consumer spending deflator is reading 2.1 percent for the past year, compared to over 3 percent six quarters ago. The core inflation rate is down to 1.9 percent, below the Fed’s 2 percent target.
Even employment is holding its own. According to Automatic Data Processing’s private employment survey, which showed its strongest gain in four months, October looks like it will produce about 125,000 new jobs.
Meanwhile, rising exports of American goods and services are booming to such an extent that the deep housing recession is being cancelled out. And while many continue to predict a consumer collapse because of falling home prices and tighter credit, after-tax inflation-adjusted income is 4.1 percent ahead of last year, for a $344 billion gain, while the purchase cost of energy prices are flat. The little noticed factoid is that consumer energy use per unit of GDP has actually fallen by more than 50 percent in recent decades.
Again: If things are so bad, why are they so good?
The stock market roared after the Federal Reserve cut its target rate on Wednesday by 25 basis points to 4.5 percent. The rate cut was a small insurance policy, just in case the subprime credit crunch and the housing downturn take a larger toll on the economy.
But listening to the Democratic presidential debate on Tuesday, you’d think it was 1929 all over again. The litany of scare-talk complaints includes China trade unfairness, globalization, immigration, income inequality, stagnant wages, a shrinking middle class, the sinking dollar, and high oil prices.
Yes, there is home deflation on Main Street and loan deflation on Wall Street. It will continue. But what about the rest of the story? When you listen to the hedge-fund short-sellers and the liberal politicians as they attempt to discredit the Bush economic boom, you could almost fall for their bear-market seduction. But the seductress turns out to be an economic harlot — not a beautiful woman.
The true message of the strong economy is that we’re virtually guaranteed of a Goldilocks soft landing or better — and certainly not a recession.
It’s interesting that while the Bush tax cuts of 2003 continue to encourage investment and entrepreneurship, expanding national income and higher tax collections have brought the big bad budget deficit down to $160 billion, or roughly 1 percent of GDP. Using something called the primary deficit — which extracts net interest on the debt and can be used to measure fiscal stimulus on the economy — we actually have a 70 billion surplus.
These are all reasons why it would be foolhardy to embrace large-scale tax-hikes to allegedly fight the budget gap.
House tax chief Charlie Rangel’s great idea to reduce the corporate income tax is the first pro-growth tax-cut measure from a Democrat in many years, and hopefully his effort will spur a discussion of full-scale tax reform by the Republican and Democratic candidates. But looking to the rest of Rangel’s plan, there are ways to eliminate the alternative minimum tax that do not require big tax hikes on the most successful earners and investors.
For example, the Bush administration’s tax-reform panel, chaired by former senators Connie Mack and John Breaux, proposed a growth-and-investment plan with only three income-tax brackets of 15, 25, and 30 percent. The plan would repeal the AMT and reduce the corporate tax to 30 percent. Capital gains and dividends would remain at 15 percent.
Or there’s the new plan from Wisconsin House member Paul Ryan that would move to a 10 and 25 percent tax system while also eliminating the dreaded AMT.
In other words, there are a lot of ways to gently nudge tax rates lower while broadening the tax base that would keep the Bush boom going well into the future.
The print and broadcast media do not give President Bush much credit for his economic policies. But somehow I have to wonder whether low unemployment, strong growth, negligible inflation, and record stock markets do not deserve just a bit of praise.
It is still the greatest story never told.
The admin could do a damn better job of boasting about all this stuff too, and hold the MSM accountable for the metrics they used during the Clinton years to boast about him, because those same metrics are kicking ass now.
ping
Yep! I guess what matters is no longer “The Economy, Stupid”, huh?
this administration has done such a GREAT job over the last 8 years...economy, situation in Iraq improving, low taxes, and a good supreme court
I only hope the economy does so poorly under Hillary. At least in term of jobs and growth. Spending could be better, though. I do wonder how much of this growth will be erased when the inevitable higher taxes and spending cuts go through.
I wish, however, Kudlow were a bit more serious and didn’t use words like “breathtaking”. It reminds me of Tamar Jacoby, breathlessly panting at the prosepect of amnestying tens of millions of illegal aliens.
Baloney. They must not be counting meats, gas, electricity, propane, milk, corn, or anything else that I buy to support my family. Everything has gone up. more than 1.9 percent over the past year.
“Baloney. They must not be counting meats, gas, electricity, propane, milk, corn, or anything else that I buy to support my family. Everything has gone up. more than 1.9 percent over the past year.”
You are one consumer....You state: “everything has gone up more than 1.9%”...
Another consumer’s expenses might have dropped 20% or more in the same time period...
Look at the big picture...not the small one...
However, I see how the Dems can run on saying how expensive certain thing are...I believe ‘Joe/Jill six-pack’ still votes on price of gas, milk, coffee, etc...
Bump
To the liberal minded politician ANYTHING that is good is bad and things are usually relatively good when a conservative is POTUS.
What? The dem's didn't bring up that a booming economy is the cause of the fictitious global warming debacle?
They really are slipping.
Now the slogan should be “It’s the media stupid (and vice versa)”.
Yes, however since no doom and gloom is offered by the promotion of a free Iraq lately via the echoing sound of crickets, the DNC and their partners in the MSM have to focus on creating another lie that the public will be pounded with to promote their #1 agenda. Power!
For now it will have to be the economy that they will focus on since they have lost the political battle to take away our safety and freedom via our current success in Iraq.
Not housing. Not consumer electronics. Not used cars. Not long distance rates. Not cell phone rates. Not Internet access rates. Not advertising prices. Not the value of loan notes.
So don't kid yourself that *everything* has gone up in price.
It hasn't. Not even close.
They never can run on the fact that gas, milk, coffee, ect. is much more available here in the good ol' USA then anywhere else in the world.
Nope, they have to run on the fact that we don't live in Utopia.
It's a campaign that can be run until the end of time and can gain votes from the weak minded.
I think the housing market has had such a mushy impact on the economy because the drop off in new housing was predicted for so long and it was so obviously inevitable. No one was surprised except for the Democrats who will undoubtedly be surprised by the setting of the sun today and will blame it on Bush and his infernal war.
[formerly] Live Thread President Bush Makes Major Address in War on Terror to Heritage Foundation
FOX News Channel | November 1, 2007 | Self
Posted on 11/01/2007 9:47:26 AM PDT by Lucius Cornelius Sulla
http://www.freerepublic.com/focus/f-news/1919566/posts
Q3 2007 is not a 12 month period--it is a 3 month period from July to September. You can see here for example that gas prices declined in the 3rd quarter from the 2nd quarter in 2007 although it is on the way back up in the 4th quarter.
Is gas even used to calculate the CPI? It doesn't matter that the price of things I don't buy has gone down. Necessities have all gone up a lot more than 2 percent.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.