GDP is still the best overall measure of our economy. It stands for gross domestic product.
It covers consumption, investment, government, and trade.
For the past 25 years, it’s been stuck around 2 percent, on average. For the prior 100 years, GDP growth averaged 3.5 percent.
That was real prosperity for all Americans. Top, middle, lower incomes. Not only prosperity, but opportunity to climb the ladder of success.
Now, I think the Trump economic program of supply-side tax cuts, deregulation, drill, baby, drill, and free and fair reciprocal trade, is capable of producing 5 percent GDP growth. That’s right, 5 percent.
Not every quarter or every year, but I think with huge business investment, including the AI boom, along with the drop in oil prices, which could actually get us to zero inflation for a while, Mr. Trump’s program could deliver 5 percent growth next year.
Maybe even the year after.
Mr. Trump’s shock-and-awe reimagination and rejuvenation of a new capitalist path to prosperity is right now completely underestimated by everybody. Friend and foe.
Even the oil price decline, to the mid $50s a barrel right now from nearly $80 a barrell at the beginning of the year.
Oil affects hundreds of commodities, services, and their prices throughout the economy.
And if the price stays more or less where it is, the 30 percent-plus decline will squash consumer prices. We could conceivably get a number of months of a zero CPI or even a negative CPI read.
This will boost real GDP. The last time the economy hit 5 percent growth was the second quarter of 2000.
That was 25 years ago. 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.
So hold on to your hats folks, we haven’t done it for more than 40 years, but I believe it could well happen next year, and or the year after that.
We’re surely going to hit DOW 50,000 very soon and go beyond with records in the S&P as well. Listening to Mr. Trump’s solid speech Wednesday night, though, just gave me the thought that we’re due for a 5 percent economy.
Larry Kudlow is a columnist for the New York Sun. From Mr. Kudlow’s broadcast on Fox Business Network.
