Luskin on the Bush Economy
James Pethokoukis covers a discussion between Barry Ritholtz and Donald Luskin. Luskin managed to say something both incredibly stupid and funny at the same time:
The housing sector has been very weak. It’s been in decline for the last five quarters. In the most recently reported quarter, the fourth quarter of 2006, the decline reached its worst level so far – a decline of 19.8 percent on a quarter-over-quarter basis, annualized. Overall in that same quarter, real gross domestic product grew at a ho-hum 2.5 percent rate. But if it hadn’t been for the big drop in housing, real gross domestic product would have been up a whopping 3.7 percent. The same pattern happened in every quarter of 2006. Every single time, housing dragged overall growth down – while the rest of the economy turned in spectacular results.
Taking out declining sectors and saying the economy sine those sectors is doing just great strikes me as really stupid. But here is the funny part. The average real GDP growth rate has averaged about 2.5% or as Luskin said was “ho-hum”. Real GDP growth during the Clinton Administration averaged 3.7%, which Luskin said represented “spectacular results”.
Now for some insights from a real economist. Kash is surprised that the combination of expansionary fiscal policy and easy money has not produced a stronger recovery.