America’s economy is ringing in its sixth consecutive year of robust growth. These doomsayers, as they’ve been called – including prominent economists and media pundits – are warning that a great economic storm may soon be coming. When rising interest rates began to weigh on the economy in 2019, the Federal Reserve responded. They changed how they did things, enacting accommodative rate cuts and quantitative easing to ensure a soft landing from a potential recession. That economic history has been rocky, particularly during the 2008 financial crisis and Great Recession. As the debate heats up, there are early warning signs that we might be heading for a new crisis by 2026.
In the years leading up to the 2008 recession, a lot of conventional economists were telling us with great certainty that the economy was fundamentally strong. The reality proved otherwise as the housing bubble, born from two decades of loose monetary policy following the dot-com bubble burst, resulted in a devastating financial crisis. This era is still referred to by some as “the greatest story never told,” and the impacts are still being experienced today.
Even in the midst of such positive and ongoing economic growth, there is an undercurrent of doubt about its sustainability. Supporters of the current administration are quick to point to the benefits of former President Trump’s tax and regulatory policies. They contend that these actions are what have made the economy so much more resilient. As critics argue, these claims do not fully take into account the larger macroeconomic picture.
Larry Kudlow, the president’s top economic adviser and longtime mainstay of the supply-side, anti-government economic order, has been unrelentingly optimistic on the economy. He contends that the recession fears being circulated today are misplaced.
“There’s no recession coming. The pessimistas were wrong. It’s not going to happen. The Bush boom is alive and well. It’s finishing up its sixth consecutive year with more to come. Yes, it’s still the greatest story never told.”
Kudlow emphasizes that despite current economic challenges, such as rising interest rates, the fundamental strength of the U.S. economy should not be overlooked. His stance reflects a broader sentiment among some supporters who argue that current growth trends demonstrate resilience despite external pressures.
Kudlow has long talked up the good correlations between stock market outperformance and pro-growth tax and regulatory policy.
“Stocks up, taxes down. Stocks up, federal regulations down. Stocks up, energy prices down.”
Kudlow’s big picture cheerleading is sure to play well with one audience, it stands in stark opposition to those calling for prudence. They contend that the effects of almost two decades of easy money is massive. No future administration, regardless of party, can quickly or easily dismiss or otherwise reverse these impacts. The long-term consequences of this monetary malfeasance cast dark clouds across all future economic scenarios.
When experts discuss the long-term economic outlook, everyone seems to have a sour face. They are skeptical that this level of growth is sustainable in the long-term. According to critics, recent data might look good on the surface. They often contain important findings, but usually absent the vital context of a more macroeconomic picture. This disconnect begs the question of whether our national policymakers and pundits really understand the ramifications of continuing down this economic path.
Kudlow’s perspective remains unwavering amidst these discussions. He insists that the U.S. economy is still moving forward in spite of what he calls unjustified doom and gloom from some quarters.
“Despite all the doom and gloom from the economic pessimists, the resilient U.S. economy continues moving ahead.”
He acknowledges that falling energy prices could have significant implications for upcoming midterm elections, suggesting that political narratives could shape public perception of economic health.
“Falling energy prices are going to hand the midterms over to the GOP as long as they sell it. It’s the greatest story never told.”
Despite such hopeful predictions, a majority of economists and analysts are cautioning that to overlook the patterns of history will invite more adverse consequences. The memory of 2008 serves as a cautionary tale for those who may presume current growth signals immunity to future downturns.