The Goldilocks Economy Plus

From today's WSJ: "The U.S. economy resurged at the end of 2006, overcoming a slump in housing as consumers sustained by lower energy prices freely spent money.

GDP climbed at a 3.5% annual rate October through December, the Commerce Department reported today. The 3.5%, fourth-quarter increase not only defied original expectations but also was much better than Wall Street generally thought in predictions made this week. The median estimate of 22 economists surveyed Monday by Dow Jones Newswires was 3.0% growth.

For the year, GDP, advanced 3.4%, compared to a 3.2% increase in 2005 and 3.9% growth in 2004." (see graph above)

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"You know, for all this talk about recession, (with some pundits calling for a recession just about every year—Paul Krugman comes to mind), the reality is that economic growth has been steady and strong following the 2001-2002 recession. Think lower marginal tax rates, implemented in 2003 to strengthen work incentives, and significantly increase after-tax investment rewards."

~Larry Kudlow in Kudlow's Money Politic$