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.

 

 

Industrial production missed the consensus estimate yesterday, so they trotted out Larry Kudlow to tell you otherwise lol

 For month over month in July, the consensus estimate was for +0.3%. Instead we got +0.2%.

Meanwhile the big picture shows, like so many indicators, that industrial production hit the big brick wall of Reaganism in 1984.

Post-war industrial production grew handsomely and its growth rate trended upward from 1948 to 1984, but not after.

Why is that?

I think it's because the incentive to invest in domestic industry went away because of the Reagan tax revolution.

Up to that time, high ordinary income tax rates had pushed owners of capital to invest in America for decades because by doing so they could take advantage of relatively much lower long term capital gains tax rates when they wanted to take income. After the dramatic Reagan cuts to ordinary income tax rates, that arbitrage disappeared. From that time onward owners of capital, now flush with cash from taking income at low ordinary income tax rates year upon year, found it more advantageous to invest abroad where low labor costs and unregulated markets promised even more fabulous returns on investment as America hobbled itself with regulation at home. The exit of businesses of all sizes from the United States to East Asia which began from this time turned into a flood after China was admitted into the WTO in 2001.

But today J. D. Vance thinks the U.S. Dollar's status as the world's reserve currency is the cause of all our problems.

If you want to know what makes me despair, that's it.

The following news story was more accurate than Kudlow. 

US: Industrial Production Up Again in July as Modest Manufacturing Recovery Continues 

Larry Kudlow has really devolved, falsely calling Fed Chair Powell the Fed’s first forever board member

Larry knows that's a lie.

He knows it's Senator Thom Tillis who is stopping Kevin Warsh from getting a Fed chair confirmation hearing, not Jerome Powell.

But he never mentions that.

Truly disgraceful.

I guess Larry wants no one in charge at the Fed when Powell's term expires on May 15. 

Meanwhile Alan Greenspan remained as Fed chair in 1996 pending confirmation for his next term, which took almost four months, and Marriner Eccles stayed on as Fed chair for over two months after his term expired, and on the board of governors after that from 1948-1951. G. William Miller stayed on as Fed chair for over a month in 1978 after his term expired, and Chair Powell himself had to wait over three months in 2022 for confirmation to his second term.

But Larry doesn't mention any of that either, because he's a liar.  

Powell is doing his duty while Mad King Ludwig tries to wreck everything he touches, and Larry Kudlow has become nothing but Trump's partisan hack.

The New York Sun and Real Clear Politics should be ashamed of themselves for circulating this trash.  

Powell's Bizarre Plan To Stay On at the Fed

Larry Kudlow, New York Sun

Even Larry Kudlow recognizes that GDP hasn't been good since 1984

... The last time real GDP hit 5 percent for the entire year was Ronald Reagan’s 1984, where the number was 5.6 percent for that whole year. ...

Here.

If Larry were completely honest he'd recognize that real GDP growth has been in steady decline in the entire post-war.

The percent change peaks are plain as day, unless you're an ideologue.

We've gone from 8.69% in 1950, to 7.23% in 1984, to 6.15 in 2021 (COVID panic spending), and the dozen or so routine percent change years above 5% between 1950 and 1984 when the economy was still holding its own have disappeared.

click to expand

 

The Reagan Revolution didn't do one thing to stem the decline, the Trump Gimmickry even less. In fact, the Reagan Revolution made it worse.

The answer why is paradoxical.

The debt-based economy of the United States ran out of gas under Reagan because he cut the taxes which paid for that debt, too much and on the wrong people. It's still a debt-based economy, but we don't want to pay for it anymore.

This is the infantile cry of libertarianism. 

We all think the growth of debt has been the problem when paying for that growth has been the problem. We threw a tantrum and decided to stop paying for it, and its growth naturally contracted, and along with it GDP, in self-defense so to speak.  

Growth of TCMDO, the total universe of debt, which steadily climbed the ladder in the post-war, plunged after 1985, from percent change 15.36% to 11.11% in 2004 to 9.51% in 2020 (COVID panic spending).

 

Debt draws future prosperity into the present, but what you get if you don't pay for it sufficiently is less prosperity when you reach the future from which you borrowed.

And as you pay less, you then borrow even more less so to speak, and get even more less. Rinse and repeat. 

Welcome to the future. 

It's really that simple.

Taxes have been much too low on the rich, and for a long time, and reversing that is the sober reflection of an age which realizes it made a mistake, starting long before Reagan with JFK, the libertarian cad who bedded more women in the White House than the rest of them combined. His Revenue Act of 1964 passed under LBJ cut the top income tax bracket from 91% to 70%.

The question we have to ask ourselves now is, are we ready to give our system another try and tax everyone, but progressively, and practice fiscal and moral restraint for a change . . .

or are we going to say yes to the billionaires who were made by all this obscene excess and who want to impose an un-American system of feudalism with themselves at the top and the rest of us their humble serfs?

George Washington wouldn't kneel even in church.

I'm with that guy. 

Why did Larry Kudlow cling to his job as Director of Trump's National Economic Council after he had a heart attack in June 2018?

 

 

Why Is Powell Clinging to His Job?

Larry Kudlow, New York Sun

 

Get off it, Larry. 

Trump's stupid bullying of Jerome Powell is analogous to his stupid bullying of Canada's Justin Trudeau and now Mark Carney

Jerome Powell doesn't set interest rates.

 

The Federal Open Market Committee sets interest rates. That's why the release of the committee's prior meeting minutes is always keenly awaited and is by itself a major market mover. Powell's is one vote among many on the FOMC:

 

Where interest rates should be today, and when they should be reduced, is already a topic of debate inside the Fed, a decision, it should be noted, that cannot be made unilaterally by the chair. Powell’s leadership and professionalism does not appear to be a concern within the halls of the central bank. Certainly, none of his colleagues, present or past, have made the case that he is incompetent. 

 

 

Similarly the Canadian Prime Ministers' control over trade decisions is also muted, deferring as they must to provincial and territorial authorities.

 

Trump bullies people like this who cannot make unilateral changes to policy in order to make himself look like an assertive leader to his equally stupid followers.

 

That's why people like Larry Kudlow disgust me. He knows what I am writing is true, but he joins in on the pig pile nonetheless. 

 

Greater things are at stake in this than interest rate policy. Trump is playing with fire. 

  

Now the disgusting Larry Kudlow piles on Jay Powell

 

Can Jay Powell Make It Through the Weekend?

Larry Kudlow, New York Sun

Is Rasmussen Reports a fake poll, Larry?

 

 

Fake Polls Won't Tell You About Trump's 100-Day Success

Larry Kudlow, NY Sun

Elon Musk and DOGE are unpopular in four of six polls, mixed in the other two, a seventh is just Republican propaganda in the hands of Larry Kudlow

 Is Elon Musk’s DOGE 'very popular'? That’s not what the polls say.

With the budget deficit topping $1 trillion again, Larry Kudlow promises a middle class tax cut proposal for later in the year

The American people are for two incompatible things, spending and tax cuts, and Trump is giving it to them, good and hard.

Story.

Trump's personnel decisions in a nutshell

The fools at CNBC write the dumbest headlines about jobs

"Strong job growth is back: Payrolls jump in June well above expectations"

The Civilian Employment Level is cyclical. It routinely bottoms in January and peaks in the summer with the cycle of seasonal part-time and full-time, the latter peaking in the summer months when millions of new graduates from high school and college get their first jobs.

So it is completely natural to have higher expectations for good jobs numbers in the summer, especially after four months of poorer performance than 224,000 Total Nonfarm Payrolls.

But if we were really having a jobs boom, "strong job growth", it would look like this, not like Trump's record so far with just two months out of thirty above 300,000:

LOL Larry Kudlow: 22,000 new payrolls in February 2019 "fluky", but 54,000 in May 2011 "meager", economy "sputtering", possibly a sign of recession

Obama Owns This Unemployment Report:

In recent weeks, a whole bunch of new economic stats have been pointing to a sputtering economy -- maybe even an inflation-prone, less-than-2-percent-growth recession. Stocks have dropped five straight weeks, as they look toward slower growth, jobs, and profits out to year end. And Friday's jobs report didn't buck these trends.

"Anemic" is the adjective being tossed around the media. According to the Labor Department, nonfarm payrolls increased a meager 54,000 in May, while private payrolls gained only 83,000. A week or two ago, Wall Street expected 200,000-plus new jobs. Didn't happen.

I remember when Trump promised a 10% spending cut in Jan 2017, now Kudlow announces a 5% cut after Republicans spend us blind: 100% politics, 0% serious

Trump to whack DC with 10% cut to discretionary spending, 20% cut to personnel

What a crock that turned out to be.

Federal employment is exactly in Feb 2019 where it was in Nov 2016: 2.799 million. 

And outlays? Look at the outlays!

Outlays in fiscal 2017 were up 3.3% from 2016, up another 4.8% in 2018, and up again in fiscal 2019 a whopping 5.6%.

Overall for fiscal 2019 spending is up 14.4% from 2016.

Just in time for the next election cycle, however, Larry Kudlow is out promising a spending cut of 5%.

Total BS.

Famous last words, Larry Kudlow edition

'Recession is so far in the distance I can't see it!' Trump's top economic adviser says fears of collapse are 'nonsense' as stocks erase ALL of 2018's gains in a few hours and five top tech stocks lose $1 trillion in value

The cult of Xi erupts over remarks by little Larry Kudlow

Kudlow:

“I don’t think President Xi at the moment has any intention of following through on the discussion we made and I think the president is so dissatisfied with China on these so-called talks that he is keeping the pressure on — and I support that.”

China’s foreign ministry spokesperson Hua Chunying:

“That the relevant United States official unexpectedly distorted the facts and made bogus accusations is shocking and beyond imagination. The United States' flip-flopping and promise-breaking is recognized globally."

More here.

Trump to name the brain dead Kudlow to replace Gary Cohn at National Economic Council

The brain dead Kudlow, who served during the Reagan Administration but can't remember a better month for jobs than the 313,000 reported for February 2018, is reported to be Trump's choice to head the National Economic Council.

The story is here.

Larry Kudlow is brain dead and he's on the radio

Like Rush Limbaugh, Larry Kudlow doesn't accurately remember the Reagan era.

It's embarrassing coming from these self-appointed spokesmen for Ronald Reagan.

Unlike Limbaugh, however, Kudlow actually served in the Reagan Administration so he really ought to know better, but today on the radio he kept saying that the jobs created in February 2018 (313,000) don't get any better than that.

Flashback to February 1984: jobs added 481,000. Or February 1988: jobs added 453,000.

Need more?

June 1983: +379,000. July 1983: +418,000. September 1983: +1.115 MILLION.

1.115 MILLION!

IN ONE MONTH!

Do I need to go on?

Yes, I think I do.

November 1983: +353,000.

December 1983: +356,000.

January 1984: +446,000.

April 1984: +363,000.

June 1984: +379,000.

July 1984: +313,000.

November 1984: +349,000.

March 1985: +346,000.

July 1986: +318,000.

September 1986: +347,000.

April 1987: +338,000.

July 1987: +347,000.

October 1987: +492,000.

June 1988: +363,000.

September 1988: +339,000.

November 1988: +339,000.

The current jobs boom isn't a boom, not yet, not by a longshot, and is NOTHING like the Reagan era, and Kudlow is doing a disservice to the historical record in which he played a part.

You've become a political hack, Larry.

YOUR average hourly earnings are NOT up 2.9% as widely reported, for example by Larry Kudlow this weekend

Yes, average hourly earnings of TOTAL PRIVATE, seasonally adjusted, is up 2.9% year over year in January 2018.

Well, whoop dee do. Not seasonally adjusted it's up only 2.2%.

What to believe?

Average hourly earnings of TOTAL PRIVATE reports as much of the total universe of earnings as possible, but that's not the universe of 80% of American workers. It includes everybody, including the higher rollers in the top 20% whose big increases can skew the reported number dramatically. 

80% of American workers inhabit the world of production and nonsupervisory workers, whose average hourly earnings have always been tracked by the government going back to 1964.

Seasonally adjusted those earnings are up 2.4% year over year in January, but not seasonally adjusted BARELY 2%, a below average figure for the measure which is in keeping with what's been going on since 2008.

The little guy in this country has been getting crumbs from the masters' tables since 2008 when the routine increases averaging 3.4% before that went away. The new era averages a gain of 2.2% year over year, a cut of 35%.

The biggest gain in recent memory was 2.8% for January 2017, meaning most workers got their best increases since 2008 in 2016, not in 2017, and the 2% gain for 2017 means . . . THIS IS NOT A BOOM.

When the average worker starts getting ROUTINE year over year increases above 3% you'll know things are better.

They aren't.

The price of the latest continuing resolution will probably be a big tax increase

The last time we had a really big continuing resolution, defying "regular order", the Republicans gave away the store in exchange for lifting the export ban on oil.

Exports began in early 2016. The price of West Texas Intermediate crude has actually risen 51.6% since then, from an average of 31.68 in January 2016 to 48.04 in August 2017.

Larry Kudlow thinks Trump is a genius for clearing the deck with the debt ceiling, hurricane emergency funding, continuing resolution deal with the Democrats because now Congress can finally get down to tax reform and pass it before the end of the year.

Watch your wallets, I say.