Mr. Kudlow is apparently on the short list for new National Economic Committee chair. Maybe a good time to review some of his macro predictions.
Figure 1: Case-Shiller US National Home Price Index, s.a., deflated by CPI-all (blue, left scale), and real GDP, bn. Ch.2009$ SAAR (black, right scale). NBER defined recession dates shaded gray. Red line at 20 June 2005 comment on housing bubble, and pink line at 7 December 2007 on recession. Source: S&P, BLS via FRED, BEA (2017Q4 2nd release), NBER, and author’s calculations.
Jeffry Frieden reminds me that Larry Kudlow makes an appearance in our book, Lost Decades (page 46).
A few months later Larry Kudlow, the National Review’s economics editor, wrote a column titled “The Housing Bears Are Wrong Again,” whose subtitle claimed that the housing sector was “writing [a] how-to guide on wealth creation.” In it, Kudlow dismissed “all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.”
Then in December 2007, Kudlow wrote:
There is no recession. Despite all the doom and gloom from the economic pessimistas, the resilient U.S economy continues moving ahead’”quarter after quarter, year after year’”defying dire forecasts and delivering positive growth. In fact, we are about to enter the seventh consecutive year of the Bush boom.
To quote Bill McBride, “Larry Kudlow is usually wrong.”
Update, 4:30PM Pacific: Sigh. Reader Jeff seems annoyed that I didn’t plot the post-2012 data on home prices. Here is the graph with data extended backwards and forwards. I don’t think it changes anything in my mind regarding the usefulness of the “bubblehead” comment in 2005.
Figure 2: Case-Shiller US National Home Price Index, s.a., deflated by CPI-all (blue, left scale), and real GDP, bn. Ch.2009$ SAAR (black, right scale). NBER defined recession dates shaded gray. Orange shading denotes period 2017Q1 onward. Red line at 20 June 2005 comment on housing bubble, and pink line at 7 December 2007 on recession. Source: S&P, BLS via FRED, BEA (2017Q4 2nd release), NBER, and author’s calculations.
Curious that you cut off the graph in 2012. If the bubbleheads were right in 2005, what were they in 2015? 2016? 2017? 2018?
Never been a Larry Kudlow fan. If I sat and thought for awhile I could probably think of 15-20 guys of Larry Kudlow’s same “ilk”.
Rick Santelli is the first one that just pops into my head on the spare of the moment. Rick Santelli, if you’ll remember, was the guy in early 2009 that didn’t understand why people were upset with AIG executives taking $165,000,000 in bonuses after being bailed out by American taxpayers, as a reward for managing the company into a swan dive down the toilet crapper.
Santelli is the same type who will defend Ivy League educated guys for taking bank deposits or insurance premiums and destroying them with financial derivatives in a 20 minute CNBC oratory that would make a criminal defense attorney bow down in subjugation. Saying “Uh guys, this is really just like 16 cents really, just 16 cents is all it is”—-Then 2 minutes later Santelli’s face turns red and a blood vessel pops out of his neck explaining how upset he is that an orphaned black kid got a $1.50 lunch off the government CHIP program.
Me thinks Larry is a person Trump deserves to have.
Our Opposition Leader said he was barking mad. He may well say that I could not possibly comment
My favorite Kudlow rant was his stupid “Deficit Dance” which I recalled here:
Gosh, defending LK am I? The one thing I might note for him is that unlike a whole lot of others of his ilk with arguably better credentials, he is reported to have admitted that he actually did make a mistake in forecasting a massive outbreak of inflation back around 2010 that did not happen. As Paul Krugman has noted, many who did so at that time also have simply refused to admit they were wrong or have come up with all sorts of bizarre excuses, including the silly “It may still happen!” Apparently at least Kudlow was willing to fess up to having goofed, although that is another bad forecast he made on top of the other two Menzie notes, so not all that much of a recommendation. Janet Yellen he is not.
Janet Yellen was not NEC Chair, but was Chair of CEA under Clinton for awhile. I mentioned her because of the WSJ study done back when she was Fed Vice Chair that found her having the best forecasting record of any major figure at the Fed.
Well, I guess it could be worse. There’s always Donald Luskin lurking around. And Anthony Watts could be nominated as the new head of NASA. God forbid.
Maybe Kudlow will hire Luskin and Stephen Moore to assist him write their usual spin.