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September 30, 2006

LARRY KUDLOW SAYS WE'RE ENJOYING "A GOLDILOCKS ECONOMY:"

"We are enjoying a goldilocks economy, not too hot and not too cold." In other words, there's no economic bubble out there that's about to go "pop."

Recent economic reports confirm this: Factory production is strong. Core inflation has settled down. Excluding energy, consumer prices haven't moved all that much in the last three years. In the third quarter, real consumer spending is running 3.2 percent at an annual rate, ahead of the second quarter average. Non-defense capital-goods shipments (excluding aircraft) are 7.6 percent ahead of the second quarter. After-tax real disposable income is 5.4 percent higher than last year. And tax revenues are rolling in, with both states and the U.S. Treasury reporting record revenue collections.

Rising stocks, falling gas prices, low tax rates and the Goldilocks economy are powerful pluses for election-year Republicans. With so many indicators leaning positive, the Democrats aren't even talking about the economy anymore.

That last is the revealing bit. Just remember that, even in the Goldilocks story, the bears do eventually come home.