Bloomberg reports Trump Turns to Loyalist Kudlow as Economic Adviser in Week of Shake-Ups.
A television host from New Jersey, Kudlow is seen as temperamentally and politically similar to the president. He’s also seen within the White House as having credibility on both Wall Street and in Washington, where he served as an adviser to former President Ronald Reagan.
Given the obvious importance of credibility, let’s investigate Kudlow’s Economic Forecasting.
Larry Kudlow’s Track Record
- Bubble Spotting: In 2005, he said “all the bubbleheads” looking for a housing-price crash in Las Vegas and Naples, Florida, and the wider economy, would be proven wrong.
- Bubble Spotting: In December 2007, the month the National Bureau of Economic Research later dated the start of the recession, he was arguing there was no recession and that the “Bush boom continues.”
- Inflation Alarm: In 2010 he predicted Yellen is Spellin’ Future Inflation.
- Oil: In 2014 he argued lower oil prices are unambiguously good.
- Five Percent GDP: In 2015 , echoing Trump, he said the U.S. should have a 5 percent growth target,
- Recession: In 2016, Kudlow predicted a business recession looms.
- Tax Cut: In December, he said Trump’s tax overhaul will lead to 3 percent to 4 percent growth,
- Growth Angels: In December, he said the president is on the side of the “growth angels.”
- Long-Term Interest Rates: In February, he said that a recovering economy could push long-term interest rates beyond 3.5 percent
- Stock Market: He predicted the stock market would go up if Trump was elected.
Record Synopsis
Kudlow is 1-10. Point 9 is unknown.
How does one get credibility with that kind of record?
- Wall Street likes bullish forecasts no matter how wrong they turn out to be. Thus Wall Street approves all of those but number 6. That’s a near-perfect 9 out of 10.
- Trump is only concerned about points 7 thru 10. Kudlow is a perfect 4 for 4.
Camera Proven
Kudlow has another huge plus, as cleverly noted by the Boston Herald: Kudlow is Camera-Proven.
The man is near-perfect for the job, but there could be trouble.
What more could you possibly ask? Just one “little” thing.
Free Trade
Kudlow criticized Trump’s trade agenda before his election and more recently labelled his tariffs as tax hikes and prosperity killers.
He’s joined other economists in warning they put at risk 5 million jobs in industries that use steel.
If Kudlow does not change his tune on tariffs, he will be gone in short order.
Prediction
My guess? Kudlow changes his tune. It will add to his already immense credibility.
Mike “Mish” Shedlock
So? Markets adjust and consumers were better off. The same logic would dictate that tariffs are a good thing if they protect companies from going under.
In the Vietnam era Kudlow was a leader in SDS, the violent commie front organization. I was in the army in the late 60s and the SDS thugs did their spitting and taunting in my direction. I guess Kudlow has changed but I’ve never heard him apologize to me or other vets.
Lower oil prices are always a good thing. Just like lower car prices, lower food prices, lower health care prices, lower taxes (government prices), lower house prices, lower stock prices, and lower prices of anything else. Labor possibly excepted, depending on how you measure and interpret.
Money (Gold) prices, as well as bond (time preference) prices, are also in a bit of a special category. But lower prices for absolutely anything else, is always a good thing. As they mean people can afford more of them in exchange for any given amount of labor (as in non-leisure). Hence are wealthier.
Junk bond collapses are neither here nor there as far as good and bad goes. The whole point of junk bonds is that they are risky. Hence, some win, some lose. So, you’ll have booms, busts and collapses. The only thing to glean from a world that lacks the latter, is that one is stuck with a government so adamant at protecting financial insiders, that they are willing to rob everyone else in an effort to spare those guys from a perfectly natural effect of involving themselves with speculative ventures.
To obtain the possibility of returns in excess of simply holding cash, you must take on risk of loss. Or more accurately, someone must take on risk of loss. The closer that someone is aligned with the one standing to gain if the bet pays off, and the one making the decision regarding what ventures to be engaged in, the less distorted capital allocation will be.
Too-big-to-fail and “we”-must-save-the-system scams are just that: Scams. Perpetuated by the connected, to bail themselves out at the expense of the ever-dwindling population of productives. Heck, the US Federal Government isn’t too big to fail. In fact, it would be a darned good thing if they failed, and disappeared, tomorrow; to be replaced (maybe) by something less singularly extractive, pointless and useless. So, the idea that some petty “system” consisting of nothing but overpaid at-best-unproductive-mediocrities, is somehow an irreplaceable cornerstone of anything worth preserving, is at best laughable. Or would be, if the consequences of a well indoctrinated public’s uncritical regurgitating of that illusion, weren’t so obviously tragic.
Which are basically the same economic predictions that Steve Forbes has been making for years. I stopped reading Forbes magazine years ago, thank goodness.
He will probably start to miss his entertaining radio show and want the paycheck that goes with it. I will give him 9-12 months working for Trump before he splits or is shown the door by Trump.
That is essentially Mauldin’s “Muddle Through” theory he abandoned long ago
Anybody can be a broken clock and say you were “eventually right” because you called for a crash every month for 10 yrs. A monkey can do that.
And in other news, the oracle of Delphi beats every economist, real or fake. It was predicted, QE will cause massive inflation. It did, but the economic officialdom is still desperately looking for it. They think their bulging stock portfolio, and multi-million properties is the result of their investment smarts. With this kind of delusion, how can we talk about prediction accuracy.
Truth being no one has a clue how to forecast anything. No one.
I would add bloggers to that list…many are broken clocks with horrible calls
What economic forecaster actually has a decent record? Whether it’s authors, tv personalities, newsletter writers…most have a terrible record of you go back and examine what they have said over the years. Perma bears like Jim Rogers and Harry Dent come to mind as having abysmal pathetic forecasting records.
I made plenty of wrong calls and admitted them. Bloomberg did its best to find right calls. It found 1.
Geez, I could probably find 10 predictions you’ve made that didn’t turn out either. Myself too. Some of these are more like opinions and others haven’t been proven right or wrong. For goodness sake, how can you claim #7 is wrong, there hasn’t even been 1 quarter of GDP reported since he made that prediction.
Today, I turned on Fox Business News and noticed that they are posting US Treasury yields. I can’t remember them ever doing that. CNBC posts yields throughout the day, every day.
I agree with Kudlow, that the U. S. should have a five percent (or greater ) growth rate. We’d need serious reforms to get rid of a host of government impediments to growth to achieve a 5 percent + growth rate.
If I had listened to this clown when he was on CNBC, I’d be shooting for retirement at age 95.
When I saw Larry Kudlow I thought it was the Onion. He is usually wrong and always optimistic no matter what. I used to watch him in 2005 and after in disbelief. He is not even and economist which would be a good thing but he is stuck in his rigid beliefs. That anyone takes him seriously is scary.
We had a huge junk bond collapse and many bankruptcies in the oil industries. There was no boom as JKKudlow predicted
Woah whats wrong with point 4?
Frank Zappa nailed it 30 years ago when he said “Politics is the entertainment department of the Military Industrial Complex.”
Everyone should now realize that politics is now the ultimate “(un)Reality TV Show”.
Or, maybe he can convince The Donald to back away from that tariff stuff. That actually would help his credibility, but we’ll see. Donny does change his mind now & then.