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Expat
May 3rd, 2008, 02:57 PM
Bush's "R" Is for "Right"
A Commentary By Lawrence Kudlow
Saturday, May 03, 2008
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President George W. Bush may turn out to be the top economic forecaster in the country.

About a month ago, he told reporters, "We're not in a recession -- we're in a slowdown." At a White House news conference a few weeks later, despite the fact that reporters pressed him to use the "R" word, Bush refused.

And on Friday, after the most recent jobs report -- which produced a much-smaller-than-expected decline in corporate payrolls, a huge 362,000 increase in the more entrepreneurial household survey (the best gain in five months) and a historically low 5 percent unemployment rate (4.95 percent, to be precise) -- the president told reporters: "This economy is going to come on. I'm confident it will."

We're in the midst of the most widely predicted and heralded recession in history. Problem is, so far it's a non-recession recession. Score one for President Bush. In an election year, it could be a big one.

First-quarter GDP growth came in at 0.6 percent. It wasn't the widely predicted decline, and economists expect that number to be revised up. Gross domestic product growth for the fourth quarter of 2007 was also up slightly, while the prior two quarters averaged over 4 percent growth.

My pal Jimmy Pethokoukis quotes Stanford professor Robert Hall, who heads the recession-dating committee at the National Bureau of Economic Research: "It seems unlikely that we would ever declare a peak-date when real GDP continued to rise."

Interesting -- isn't it? -- just how durable and resilient our low-tax, free-market capitalist economy truly is. Hit by soaring food and energy prices, a bad housing downturn and a Wall Street credit crunch, the economy continues to expand, albeit slowly.

The bad news bears always focus on areas of economic weakness. But parts of the economy are doing splendidly. This includes agriculture, energy, export firms operating in the global boom, and all manner of private-sector business, professional, health and education services. Incidentally, these are the exact sectors producing the highest-paying jobs. What's more, at 154 million employed, the civilian labor force just hit a new all-time high.

Another significant data point: Corporate profits are outperforming all expectations. With three-quarters of the S&P 500 companies reporting, profits outside the banking system have increased 10 percent over a year ago.

Profits are a dirty word on the campaign trail. Hillary and Obama, who blame American corporations for most every problem under the sun, want to tax profits heavily. With ExxonMobil and other oil companies reporting strong earnings, Democrats are now calling for a windfall profits tax. Last time we tried that -- under Jimmy Carter -- foreign energy imports rose 8 percent to 16 percent and domestic energy production fell 3 percent to 6 percent. (This according to a study by the Congressional Research Service.)

A Senate Republican group led by Pete Domenici of New Mexico has a much better idea: Expand drilling and production both offshore and in Alaska. Domenici's group estimates this would produce up to 24 billion barrels of oil, enough to cover five years of U.S. energy use without a single import.

It's a vastly better plan than penalizing American businesses and their profits, which are the mother's milk of stocks, jobs and the economy. Sen. John McCain gets this. His plan to slash the corporate tax rate is the single best proposal on the campaign trail. McCain also understands that you don't raise taxes during a slowdown. Nor do you raise taxes when the economy is bouncing back.

Right now, optimism seems to be returning to the stock market. None other than The New York Times ran a front-page story stating, "Wall Street Sees Signs of Sunshine." That's like the Daily Worker announcing the end of socialism. But let's credit the Old Gray Lady with reading the tea leaves right.

As a result of mighty efforts by the Federal Reserve, the credit crunch is easing and bond-market risk spreads are falling. The stock market just finished its best April since 2003, with the Dow running above 13,000. The Fed has come to the end of its rate-cutting cycle, and the U.S. greenback is starting to gain strength. With the dollar turning stronger, gold and other inflation signals are coming down.

Even tax rebates for working people will help a bit, although I'm no fan of temporary tax cuts. The much better idea is to make President Bush's investment tax cuts permanent. McCain is for it. Hill-Bama is against it.

Whose call is it going to be?

Recessions and slowdowns come and go in the free-market economy. But even so, it looks like President Bush -- against all odds -- may have the last laugh. If he's right on his no-recession prediction, McCain and Republicans down the electoral ladder are likely to benefit.

samsung101
May 5th, 2008, 04:44 PM
Technically, per the definition of a recession, the USA is not in one.
It does take negative growth to spur one on.

We are in a deep economic downturn.

We act as if we're in the great depression, where what 30% of the nation
was unemployed, dust bowls, etc. We're not in that area at all.

5% unemployment nationally.

A bit higher in regions.

OC has had a bad time the past year - all those mortgage companies that
folded, tens of thousands lost their jobs, foreclosures up a lot in
the richest and poorest areas of the county, lots of commuters getting
killed by the gas prices. It's hard. But, with all that, I can see
full parking lots at the mall like it is Christmas - they're going for
the 'deals' due to the non-recession stores are having. Markets, full,
movies, full, People buying smaller cars in droves.

Competition is driving the prices of many things down - houses, condos,
cars, big price ticket items, etc. The stores need to sell merchandise,
even if at a loss in some cases.


Bush isn't an economic genius.
But, he was right on the minor tax cuts, and the long term benefit it
would result in.
He was right about encouraging small business growth.
Right on the pushing home ownership to new markets.
What he was wrong about was not saying 'no' to more of the spending
of Congress (Democratic and Republican)- which ballooned too much.
He was wrong not to demand more of China and Mexico in trading and
worker relations - so we can compete more.
He was wrong not to have his Labor Sec. and Commerce Sec. be more visible
and vocal - they are not up front on tv enough. To quell concerns more,
not wait until people are nervous.


Our business felt the market hit the skids in October of 2006. We stopped
hiring, let go of a few part time people, started cutting hours of some people,
new contracts slowed down a lot. So, that was a little before most segments
felt the crunch in housing. Since February, we have slowly started to feel
a bit better, a few new contracts, back to full time work week for everyone,
and we will hire a new person for a job starting in July, and are interviewing
now.

It will be a full year before we get out of the worst of it, but, it's starting
to slowly move in a better direction....very slowly.

samsung101
May 5th, 2008, 04:48 PM
The Democrats should win the election no matter what.


It will take a huge blunder for Obama to lose.

The historical cycle points to a Democratic big win.
Add in the Bush Derangement syndrome, it only adds to the
big win to come.
McCain is an unpopular GOP candidate among the GOP, and
that spells Democratic victory all the more.

It will be hard for McCain to prevail.
Even if on taxes and the gas tax he is right.


The media is on his side, and they will highlight all he
does. They will turn on McCain quickly, and the fake 'cheating'
story with the lobbyist, will become the norm for him. Print it,
even if it isn't true. Just get the doubt out there.