Stagflation or Media Hype?

The economy is never perfect, but listening to the MSM, one would think that we are headed for another Depression. On such days, it's helpful to listen to Larry Kudlow's wisdom. He reminds us of a few items that the media has left out:

-Net imports subtracted 1.5% from GDP - excluding that figure, GDP was a robust 4.6%.

-The measure of real gross domestic purchases, which excludes trade altogether, came in at 4.4 percent annually.

-In the seven quarters following the Bush tax cuts of June 2003, the core private economy (GDP minus trade and government spending) increased at a 5.6 percent annual rate (vs. 2.7% for the seven quarters before Bush's tax cuts).

-As for inflation, Alan Greenspan’s favorite measure, the chain-weighted price index for personal consumption spending, increased only 2.2 percent in the first quarter. Excluding energy, it was up only 1.8 percent over the past year (lower than the 1998-2002 average).

The Fed will raise rates this afternoon to bring the Fed Funds rate to 3.00%, even though 10-year yields are still near record lows. It's time for the Fed to pause and let the markets know it. If it does, the stock market will be up 10% in the next month.