November 6, 2007


Bush boom despite gloom (Lawrence Kudlow, November 6, 2007, Washington Times)

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 U.S. 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 more than 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 the deep housing recession is being canceled out.

All presidents who serve two full terms experience a resurgence of popularity in their final year after the scandals and setbacks of years 6 and 7. George W. Bush is poised for an especially strong one given the improvements in the Middle East and opportunity for the Fed to cut rates over the next year.

Posted by Orrin Judd at November 6, 2007 7:06 AM

Given the last GDP numbers, I doubt the Fed is going to cut rates any time soon.

Posted by: Ibid at November 6, 2007 10:04 AM

Bernanke's specialty is the Depression as a function of usurious interest rates in a time of deflation. Once he proves his inflation hawk bona fides he'll return to what he knows to be true.

Posted by: oj at November 6, 2007 12:04 PM

Please forgive the self-referential nature of this comment. A few days ago, I did a post combining Kudlow's piece and another from James Pethokoukis that Orrin posted on a while back. I think they make a lot of sense and are more compelling when viewed together:

Posted by: Kurt Brouwer at November 6, 2007 2:49 PM