LARRY KUDLOW: What’s wrong with 5% growth?

What’s wrong with 5% growth? Or more?

To reiterate my New Year’s message that Trump’s economic boom could deliver 5%, 6%, or even 7% growth, today’s numbers are uniformly stronger than I thought. Economists note that Mr. Trump knows economics better than you do. What’s wrong with growth at 5%, or better?

The Atlanta Fed’s fourth-quarter GDP, which you remember was a lockdown quarter, was revised to 5.4%. Meanwhile, the economy’s productivity, one of the most important variables, has averaged 4.5% in the last two quarters. This is the hourly output of the non-farm economy. maybe more More importantly, the productivity of non-financial companies rose by 3.8% in the last two quarters. Therefore, the productivity trend towards 4% opens the door wide for economic growth of 5% (or more).

And again, I want to remind everyone of the greatest story never told: falling oil prices is a positive oil shock, which means it’s like a big tax cut for consumers and businesses, which means Trump-induced deflation replaces Biden-induced inflation. And with a whiff of oil-driven deflation after nearly 5 years of the Covid era, inflation under Biden is a very big positive for the economy. Democrats are completely frozen in place and paralyzed by the success of President Trump’s economic policies: supply-side tax cuts, deregulation, “drill, baby, drill,” and free and fair reciprocal trade.

As the numbers grow, and with the Trump team marketing them, the midterm election outlook looks rosier for the Republican Party. Treasury man Scott Besent, speaking at the Minnesota Economic Club (is the Minnesota Economic Club an oxymoron?), reminded people of the wages, productivity and growth benefits of full spending on plant, equipment and farm structures. Corporate investment spending was 12% during the first three quarters of last year, but even he does not appear to be implementing the positives of low oil prices that are permeating the entire economy.

There will be some negative CPI prints coming. That’s how important energy is. It’s not just gasoline, although it softens. There are hundreds of other prices affected by lower oil costs. Meanwhile, initial jobless claims continue to fall by a four-week average, and the October trade deficit fell more than expected.

And here is Mr. Trump and “the drill, baby, the drill” purging communism from the Western Hemisphere in Trump’s corollary to the Monroe Doctrine. And moving the oil power nexus from the Persian Gulf to the Americas, where it belongs.