January 3, 2015


Optimism for 2015   (Larry Kudlow, 1/03/15, National Review)

And lurking behind the energy-price drop (AAA gasoline nationwide is about $2.20, a buck less than a year ago), don't forget $3 natural gas, which is increasingly gaining energy-market share. And don't forget the economic destruction falling bomb-like on our oil-producing enemies in Russia, Iran, and Venezuela. The energy fracking revolution has done for national security what President Obama seems incapable of doing.

And don't forget the economic power of the rising dollar. King Dollar is at an eleven-year high. It's attracting capital from around the world. It's holding down inflation. It's providing major new purchasing power for consumers and businesses. Lower production costs and commodity costs will increase our exports and give us more buying power for the purchase of imports. All this helps the global economic recovery.

Most people have this story wrong. It's not Europe and Japan that are going to hold the U.S. down. It's a resurgent U.S. that's going to build them up -- despite all their structural policy mistakes.

Also inside the economy, business investment is improving, housing is slow to recover but is recovering, and wage and salary income is growing at 4.5 percent. Less 2 percent on consumer prices, that leaves over 3 percent of real spending power. Not fabulous, but good.

Looking at Treasury bond yields, real rates are rising -- a sign of better growth -- while inflation fears are declining. Banking risk indicators, like 2-year swaps spreads, are very low. And profits, the mother's milk of stocks and the lifeblood of the economy, stand at a record-high share of GDP and are likely to keep growing in a 5 to 10 percent range.

Posted by at January 3, 2015 10:12 AM

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