When it comes to fighting for free markets and railing against government intervention in the economy, no one on TV does it better or more passionately than economist Larry Kudlow of CNBC. The anchor of "The Kudlow Report (7-8 p.m. EST) and co-anchor of "The Call," (11-12 p.m. EST) is a former Reagan administration economics adviser and now CEO of Kudlow & Co., an economic research firm. A nationally syndicated columnist, he also has his own blog, Kudlow's Money Politic$ (kudlowsmoneypolitics.blogspot.com) and is a regular contributor to National Review and National Review Online. On Friday, at the end of a week in which we saw Chrysler start down the road to bankruptcy and learned that the Gross Domestic Product had fallen 6 percent over the last six months, I called Kudlow at his office in New York to see if he was still upbeat about the chances for a short-term economic recovery.
Q: You specialize in finding signs of recovery -- "mustard seeds," as you call them. Did the 6 percent GDP percent drop or any of the other events of this week dent your overall optimism?
A: No. There are cross currents. The best part of the story is the economic statistics coming out of Washington are looking better. You're right about GDP, but inside the report, consumer spending was actually stronger - up 2 percent - and inventories really crashed - over a $100 billion decline. So it looks like the consumer is stabilizing or even improving, because gasoline prices are so low it's boosting consumer incomes and boosting purchasing power. Even though the unemployment rate is going up, still over 90 percent are still working. I think that was a big plus.
You've got some other reports.. Business orders are rising. Manufacturing is improving. Some of the regional manufacturing reports from the Chicago Fed and the Richmond Fed showed strong improvement. It's all pretty good stuff, actually. I think it's safe to say that the worst is over. There's another report I want to cite: We've had now three or four weeks of declining jobless claims. That's a leading indicator of the economy. For the first time it's starting to roll over and go back down, and that's very important.
Q: In the short run, you said on TV this week we might hit 10,000 in the Dow by summer?
A: Yeah, I think so. I think the stock market is recovering. You're up about 30 percent from early March. I don't know whether it gets to 10,000 or not, but 10,000 is a good benchmark. I think that's part of the recovery story.