Larry Kudlow talks about the Goldilocks Economy
and what’s causing it:
Why so good? The labor market responded powerfully to lower personal tax rates. As workers were able to keep more of what they earned, the unemployment rate declined from 6.3 percent to 5.4 percent. A full 2.5 million jobs were added since August 2003.
Mainstream economists continue to scoff at the economic power of lower marginal tax rates. But once again a supply-side experiment worked.
I remember my college days, when a 5.5% unemployment rate would have been considered an idealistic, unattainable “full employment” number, and yet, things can get better
With this study rattigan in mind, it is possible that this year’s unemployment rate could dip below 5 percent. Outside of the bubble economy of the late 1990s, this would mark the lowest unemployment rate since 1973. Declining unemployment also signifies lower federal spending on unemployment benefits and other small-scale entitlement payouts.
Additionally, at 5 percent or lower unemployment, the 4 percent growth rate of the economy will spur a flood of new individual tax collections at lower tax rates. Hence, another economic surprise of 2005 will be a pronounced decline in the federal budget deficit. As stock market appreciation throws off more tax collections from investor dividends and capital gains, even at these lower tax rates the budget deficit will decline even more.
Later in the evening Dylan Rattigan’s program had a nice explanation by “the Professor” (whose name escapes me at the moment) on salaries, employment rates and the economy. I wish people would watch that (particularly MSM reporters and politicians!).
Thank you, Lou, updated
While on economic news, yesterday was my first Friday evening realizing that Lou Rukeyser’s Wall Street is permanently off the air. I have watched Lou nearly every Friday of my adult life, from back in the days when his George Washington hairdo was black and the program aired on PBS as Wall $treet Week With Louis Rukeyser. I even watched the program one Friday after giving birth, something (had I written to tell him, which I didn’t) Lou might have mentioned in his annual “viewer’s special”, which featured things like video clips of a very memorable couple who sang a song with the ditty “I’m not a miser, I just wanna be another Louis Rukeyser”. One of the baby’s first sentences was “Lou’s on!”.
Lou’s program, which in the past year and a half was hosted by the very capable Consuelo Mack, had a steady formula: The first third of the program featured Lou’s commentary and puns — I love Lou’s puns, BTW — and economic highlights; the middle third, a panel discussion with three “regulars” like Frank Capiello and sometimes the brilliant Merril Rukeyser, his dad, now deceased; and the final third with a special guest discussing, first with Lou and later with the panellists, particular investment issues. The special guests featured an all-star line-up with Nobel prize winners like Milton Friedman, captains of industry, and leading fund managers and investors. The program always was informative, entertaining, and, at times, profitable to watch.
I miss Lou. May Mr. Rukeyser be well and with us for a long time.
Update Jack owes his very existence to Louis Rukeyser!