The big-bang story of U.S. private business Lawrence Kudlow July 8, 2006

Did you know that just over the past 11 quarters, dating back to the June 2003 Bush tax cuts, America has increased the size of its entire economy by 20 percent? In less than three years, the U.S. economic pie has expanded by $2.2 trillion, an output add-on that is roughly the same size as the total Chinese economy, and much larger than the total economic size of nations like India, Mexico, Ireland and Belgium.

This is an extraordinary fact, although you may be reading it here first. Most in the mainstream media would rather tout the faults of American capitalism than sing its praises. And of course, the media will almost always discuss supply-side tax cuts in negative terms, such as big budget deficits and static revenue losses. But here’s another suppressed fact: Since the 2003 tax cuts, tax-revenue collections from the expanding economy have been surging at double-digit rates, while the deficit is constantly being revised downward.

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1 thought on “The big-bang story of U.S. private business”

  1. Kudlow writes:

    Wages are rising today, so we know domestic labor markets must be tightening, not softening. To wit, average hourly compensation has risen to 3.9 percent over the past year, while average weekly earnings have grown to 4.5 percent. In early 2004, these wage measures were only up 1.5 percent.

    Unfortunately, the Bureau of Labor Statistics reported:

    The Consumer Price Index for All Urban Consumers (CPI-U) increased
    0.5 percent in May, before seasonal adjustment, the Bureau of Labor
    Statistics of the U.S. Department of Labor reported today. The May level
    of 202.5 (1982-84=100) was 4.2 percent higher than in May 2005.

    If the cost of living rises by 4.2 percent, but hourly compensation has risen by 3.9 percent that means workers are .2 percent further behind where they were a year ago, not ahead.

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