Larry Kudlow is back touting a non-existent booming economy just like he did during Trump's first administration

 This Is the Best 'Hard Goods' Boom in Decades

... Tuesday’s industrial production report showed back-to-back gains in June and July for both total production and manufacturing production. ...

Larry is rightly happy about the increase in the durable manufacturing index. 

No doubt about it, it is up, but notice that it is still not as high as it was in Trump 2018 or Obama 2014. 

More importantly, percent change in the index for 1H2026 was 1.94, lower than the 2.28 in 1H2018 when Trump was president the first time.

But this isn't an economic boom, and neither was that. 

Those are welcome highpoints but in a long-term trend all down hill since the 1980s when Reagan was president, and no one asks why.

Kudlow & Co. never go back in the data as far as they should, even though they served in the Reagan Revolution and touted the results for the economy of the posthumous JFK tax cut in the Revenue Act of 1964, which cut the top marginal rate from 91% to 70%.

Today they use these data sets which go back only to the beginning of 1972, but even at that there is a giant durable goods growth spike of 9.02% in 2H1983 which we have been unable to reproduce since then, which should make them ask themselves, What went wrong?, but it doesn't.

Socrates said that the unexamined life isn't worth living.

So let's examine it.

Robust post-war growth is a truism which is true!

Industrial production generally, and for manufacturing specifically, grew robustly year over year, and the trend for those growth rates was itself strongly positive, as the chart for 1948 to 1984 shows.

But look at what happens after 1984. 

You still get positive growth rates year over year, but not as robust as before, and the trend for those growth rates becomes strongly negative.

Something changed in the 1980s to cause this.

I say it's the Reagan Revolution in ordinary income tax rate reductions which caused this, not because tax cuts for rich people is bad, but because Reagan unintentionally sabotaged the tax rate arbitrage which before those tax cuts existed had pushed rich people for decades to make long term capital investments here at home in order to get low capital gains taxes in return.

In other words, Reagan destroyed the negative incentives which drove domestic investment. Take away the penalty of high ordinary income tax rates, and suddenly there's no reason to plow your money into the investments which drive business, jobs, and GDP, especially as enthusiasm for regulations of all kinds began to grow and hamstring profits. 

The new tax cut windfalls freed up a lot of money to seek return wherever it could be found, and in the aftermath of the Reagan era that money increasingly went abroad. For people who lived through it, the one persistent theme of the business news was one business after another closing up shop in America and moving production overseas. After China entered the WTO, the steady departure of businesses from America became a flood.

And that's why that last chart, for 1984 to the present, looks like hell.

It has nothing to do with the U.S. Dollar being the world's reserve currency either. That is the dumbest thing I've heard in years, and I can't tell you how amusing that is coming out of the mouth of a Yalie. I guess they don't teach 'em at Yale that the dollar was the world's reserve currency 1948-1984.

I am not an economist. I do not know how to wave a magic wand of policy to make it all right again. 

I am just a scholar in the humanities who wanted to know what turned my world upside down in 2007 and why I and millions like me have never recovered.

I have made a life for myself in spite of it all, as people do, but I tell you what, America was pretty great once, so don't tell me this is an economic boom.

I knew the economic boom. The economic boom was a friend of mine. And Larry, this isn't an economic boom.

 

 

Yeah, well, the reports were "benign" but the facts weren't

 This is the problem with fake economic news, which isn't meant to inform. It's meant to shape, just like fake polls.

It's disinformation, meant to blunt the bad news every time its ugly head pops up to keep stock markets from falling.

Everybody's talking the stock market book, because everything else sucks. They're afraid that speaking the truth would be all it takes to destroy confidence in the economy, when everyone who must experience the economy on the street knows it is not booming.  

What rising Treasury yields are telling us 

... The yield on the 30-year Treasury bond ended the week at 5.26%, the highest since June 2007, despite benign reports on consumer and wholesale price inflation. (This is unusual, as long-term yields tend to move lower when inflation becomes less of a worry.) ...

Core wholesale prices have been increasing at an average monthly rate of 4.24% in 2026. Peak before the pandemic was 2.99% in August 2011. 

Core consumer inflation averaged 2.62% in 1H2026. Before 2021 there wasn't a reading that high since 2H2006 at 2.72%. Twenty years ago.

The bond market isn't blind to the facts like these reporters are, who have their heads in the sand. 

Yields are rising because of persistent inflation. 

The boom in manufacturing is so quiet it's showing up as -0.11% change from a year ago in July 2026 for manufacturing employment

 😂😂😂

The Quiet Manufacturing Boom

Steve Cortes, The Daily Signal

 

This is the ten year chart, from July 2016, a few months before Trump was elected the first time.

 

The trend for manufacturing employment growth since then is negative.

 

Be careful about what politicians promise.

 

You often get the exact opposite ("mission accomplished", affordable healthcare, Mexico will pay for the wall, "we're going to cure cancer", energy bills cut in half, et cetera, et cetera, et cetera).

 

Meanwhile the trend for industrial production in manufacturing remains . . . not good. 

 

 

 

CNBC says long-term unemployment is surging but it is not, at least not yet

Long-term unemployment is surging in the U.S. There are hidden costs for workers and the economy

Long term unemployment is . . . falling.

The four-week moving average of initial claims has been falling for a year.

The four-week moving average of continued claims has been falling for ten months, not very fast at first, but falling decisively nevertheless.

The actual number unemployed 27 weeks or longer is down since December 2025. Yes, it is slightly higher than in January. 

The percentage of population unemployed 27 weeks or longer is not surging either. At 0.666% in April, the percentage has been holding fairly steady near this level also for ten months.

In this latter metric, a surge would look more like a steady climb toward 1.00% of population unemployed 27 weeks or longer, which is common after recessions begin. The climb to the current level has been very choppy, reflecting the chaos of positive and negative developments under Trump II.

And incidentally, a contraction in this metric falling below 0.5% would indicate good times are here indeed, so this right now is not that either, as Trumpty Dumpty keeps saying. 

Of course all of this could be about to change for the worse because of oil.

Oil makes our world go round. 

  

 

 

Manufacturing jobs went sideways in April 2026, economic boom nowhere in sight

 

48.67% had a full time job in April 2026

 Trump's economic boom isn't.

 

Trump's Hollow Man GDP: Not with a bang but a whimper

 Trump: Our Country Is Booming, Despite Being In A "Mini War"

 

Twelve years ago under Bush 43 52.36% of Americans had full-time jobs, today just 50.72% do, a deficit of 4.242 million full-time jobs

It's not an economic boom today anymore than September 2007 was, but after the catastrophe of 2008-2009 and the Obama years, some are just relieved that the torturer has stopped visiting their jail cells and mistake that for freedom.

September 2007 (click to enlarge)

September 2019 (click to enlarge)

Average miles traveled on US roads in 2019 through July looks flat compared with 2018

To put the complicated calculation in a nutshell, travel per person 16 years old and over averaged about 12,497 miles for the first seven months of 2019. The full year average for 2018 was 12,483.

So despite there being more cars on the road and population growing and a so-called economic boom, road travel has plateaued.

For another look at it, see Jill Mislinski here, whose population-adjusted road travel chart also shows that the flatlining began with 2017 and that 2005 was the peak year.

You are free to move about the country, but you are not, at least not like you were in a car. 

April 2019: 882K dropped out of labor force, labor force contracted 726K, employment level contracted 103K, participation rate fell to 62.8% (the 2016 average), average weekly hours so far in 2019 down 0.4 from 2018 average

Data.

Data.

Data.

Data.

Data.

But other than that it's an economic boom because total nonfarm is up 263K.

This has never been an economic boom, just more meh

Did Billy Cunningham mention the Trumpster's lousy February jobs number last night?

If he did I must have missed it.

20,000 jobs in February, worst performance in 9 years, but Billy Cunningham blathered on about how socialism fails and how Americans enjoy a high standard of living because of great companies like Kroger, Amazon and Walmart. No mention of this huge anomaly in the Trumpster's so-called economic boom.

I can remember when Walmart was widely perceived as the enemy by wide swaths of America because it destroyed mom and pop stores wherever it decided to leave its giant footprint. Walmart defended itself against this opposition with its "Buy American" policy, but those days are long gone now. Walmart and Amazon are now storefronts for Communist China and the globalism which took away America's best jobs for ordinary folks. And the tax breaks generally provided by state and local governments these days to get big businesses to locate where they are is hardly capitalism, but favoritism, state capitalism and fascism. Too much of American life is now the people vs. government and business allied together against them.

But more to the point is that Billy Cunningham's idea of a great America is an America that consumes, whereas the Protestant ethic which truly made America great was the one where people saved, invested and consumed beneath their means. I guess that ethic is not part of the Sunday homily at Billy's church.

It has been because of losing touch with this real meaning and practice of capitalism which has produced the moribund economic conditions where socialism now appears more attractive to growing numbers of Americans for whom capitalism-light has failed to deliver.

Too bad Billy doesn't really get it.  

If this were an economic boom earnings for most people would be increasing 3-4% instead of 2-3%

If this is an economic boom how come new home sales are at 1982 recession levels for a year and a half?

(h/t Jeffrey Snider)

Sorry Charlie: Jeff Cox of CNBC wildly exaggerates wages under Trump, "the last missing piece of the economic recovery"

Here in "Trump has set economic growth on fire":

Friday brought another round of good news: Nonfarm payrolls rose by a better-than-expected 201,000 and wages, the last missing piece of the economic recovery, increased by 2.9 percent year over year to the highest level since April 2009. That made it the best gain since the recession ended in June 2009. ... Indeed, the economy does seem to be on fire, and it's fairly easy to draw a straight line from Trump's policies to the current trends.

The wage series used by Cox for all workers differs little in August 2018 from the series for the 80% of workers who are production and nonsupervisory, except that the latter goes back much farther than 2006, giving a truer picture of where we are at. And where we are at is slightly better off than under Obama, but that's about it. It's still not as good as under George W. Bush, for crying out loud. And it's certainly not "on fire".

This is not an economic boom for most working people.

Noah Smith embraces the Trump narrative: "There’s no doubt that the U.S. economy is in a boom"

Here for Bloomberg.

After examining several indicators, which, however, are not unequivocal for their interpretation despite saying "no doubt", Noah Smith comes down on the side of improved sentiment as the cause of the current "boom".

On that we agree. There's a boom in sentiment.

The problem is, too many people are importing that improved sentiment into their reading of the data, and into their choice of the data.

For example, Smith focuses on job openings to unemployed, which is a tiny measure (6.66 million in June) of what's really going on in the labor market. But the broadest measures of unemployment still show 15.9 million unemployed, underemployed, and no longer counted in the labor force. There is still huge slack in the labor market, which is one reason why wages for the vast majority of workers are not rising like they would in a real economic boom (2.7% y/y in July vs. in the 4s in 2006/7).

Similarly Smith discusses the percent of population employed aged 25-54, but clearly misses that it's most definitely not "back to 2006 levels" as he claims (H1 2018 is at 79.2%, still below the 2006 average of 79.8% and also below the average of either half of 2006). The broadest measure of the percent employed, on the other hand, still shows a huge gap between now and the pre-Great Recession average when over 6 million more were employed than are at present (60.5% now vs. 62.9% then, on average).

The case is similar with domestic investment.

Smith chooses to highlight "Shares of gross domestic product: Gross private domestic investment: Fixed investment: Nonresidential (A008RE1Q156NBEA)" to show that "investment as a percentage of the economy is at about the level of the mid-2000s boom". But the current level in H1 2018 at 13.7% is also identical to H2 2014. Was that indicative of a boom? Did we blink and miss it? How about in H1 2008 when it was again at 13.7%? Was that indicative of a boom? If so, why did the economy then promptly crash in H2 2008?

A broader measure of domestic investment, however, "Shares of gross domestic product: Gross private domestic investment (A006RE1Q156NBEA)", shows us well off the 2006 peak and even the more recent 2015 level. Whatever we call what we have right now, the current 17.7% is still far below the 19.8% level of H1 2006, which itself failed to equal the boom level of the year 2000 (19.9%).

With all that cash unleashed by the tax reforms and sloshing around in the economy, one would think things would look a lot better than this, which simply shows that most of that money indeed went elsewhere.

GDP has been temporarily goosed by the tax reforms in concert with a fresh gusher of federal deficit spending. But those are one-offs. They will not, and cannot, be repeated over and over again in short succession.

We know what comes next.

Good comparison of the presidents on GDP by Justin Fox at Bloomberg

Guess Which Presidents Really Oversaw Economic Booms

Fox well reminds his readers that GDP is an inadequate measure in many respects, and gives credit where credit is due even when the numbers don't seem to show it.

His second chart is the better chart since it is a political comparison, which is what this is all about, pegging beginning and end of analysis to fourth quarters when presidents are elected or eclipsed.

He has Kennedy and Johnson first and second (5.5% and 5%), followed by Clinton (3.8%), Reagan 3.6%), Carter (3.2%) and Nixon 3.0%), then IKE (2.5%), then Ford and Bush 41 tied (2.2%), with Obama (1.9%) and Bush 43 (1.8%) bringing up the rear. (Trump so far is seventh, ahead of IKE but behind Nixon, at 2.7%).

A few quibbles.

The data is plenty fine for Truman 1948-1952. He should be included. His performance is the best of them all on a full term basis (5.54%), using the same compound annual growth rate Fox uses. The secret to Truman's success? He slashed government spending in the wind-down from World War II. No one seems to get that. By cutting taxes and not slashing spending, Republicans since Truman only defeat themselves and discredit what works.

Secondly, JFK didn't serve out his first term, Nixon his second. Therefore it makes more sense to view JFK coterminous with LBJ (5.19% together), and Ford with Nixon (2.73%), evaluating them together in two eight year periods of Democrat and Republican political administration respectively, which is what it was.

Third, Fox rounds his numbers, which obscures how close Bush and Obama were in their terrible records (1.83% and 1.88% respectively). 

All in all, though, we come up with similar results: Truman is first (5.54), followed by JFK/LBJ (5.19), Clinton (3.81), Reagan (3.55), Carter (3.19), Nixon/Ford (2.73), IKE (2.52), Bush 41 (2.21), Obama (1.88), and Bush 43 (1.83).

Trump's first year through 4Q2017 is 2.47%. Measured 2Q2017 on 2Q2018 just completed he's at 2.85%.

Only by comparison with the previous sixteen years is this anything to cheer about, but thankfully we have that.

If it's an economic boom why aren't inventories surging?

h/t Jeffrey Snider

GDP hysteria

Earlier in the week the economic calendar at FXStreet had indicated a consensus estimate of GDP at 4% for 2Q2018. With less than an hour to go, that prediction has risen to 4.1%.

GDPNow at The Federal Reserve Bank of Atlanta gave it's final prediction of 3.8% yesterday.

Cheerleaders for Trump on talk radio have been crowing like roosters about a booming economy, pointing to the unemployment rate, and they hope to GDP.

GDP consists of four major components: personal consumption, private investment, net imports/exports, and government consumption and investment.

That last one can contribute significantly when there are big increases to government spending, such as just occurred with defense spending.

I expect to see that reflected in this morning's report, but it shouldn't be confused with an economic boom anymore than stimulus spending under Obama.

Government can pay people to dig a hole and other people to fill it back in again, but that is not an economic boom. Neither is a fireworks display.

Fake economic boom: Industrial Production went negative in May 2018

Compared to the 1950s, this economy might as well be sleeping.