At this point, there’s probably not a lot of utility in pointing out that Larry Kudlow is almost guaranteed to be the one with “egg on his face” when it comes to the US economy.
The “egg” bit is a reference to Kudlow’s infamous December 10, 2007, piece published in the National Review in which Larry derisively referred to anyone who harbored a pessimistic take on the economy as a clueless moron. “The pessimistas are a persistent bunch”, he said. “These guys are going to wind up with egg on their faces.”
That was, without a doubt, one of the worst calls in the history of economic prognostications. Here’s what “egg on your face” looks like:
Kudlow’s job with the Trump administration can be roughly described as “economic propaganda minister”, a role which has recently required Larry to join the president’s assault on Fed independence.
Kudlow never had much credibility in the first place, but what’s happened to him since he took over for Gary Cohn is rather unfortunate – he’s yet another individual who has inexplicably decided to sacrifice every shred of dignity in the interest of perpetuating the absurd vision of a textbook narcissist.
Kudlow showed up on CNBC (his alma mater) on Tuesday to weigh in on the US economy on the heels of a string of disappointing data including the May payrolls debacle. Predictably, he persisted in the fantasy that growth will still come in at 3% this year.
To be clear, Larry doesn’t believe that, and if he does, he’s even more detached from reality than anyone realized. There is almost no chance of the US economy growing at that rate for the full year and you’re reminded that the 3% baseline is baked into Trump’s budget. Here is the distribution of Wall Street forecasts (on the right, with Goldman’s outlook on the left):
Multiple banks have revised their GDP targets lower recently in light of ongoing trade tensions, and when Kudlow mentions ISM in the clip above, he surely isn’t talking about the manufacturing survey, because it touched an all-time Trump-era low in May.
Pressed by CNBC’s Melissa Lee to explain to viewers what caveats might apply to his rosy outlook, Kudlow simply refused to answer. Instead, he scoffed and said he “didn’t want to speculate about what’s going to happen”.
As you can see, Lee was incredulous, and quickly reminded Larry that when you make a forecast, you are by definition speculating on what’s going to happen – that’s what forecasts are. She literally laughed as she spoke.
Kudlow took it one step further on Tuesday, insisting that his 3% outlook isn’t contingent upon a resolution to the trade spat with China.
When it comes to the Fed, Larry again parroted the line that the bond market now “agrees” with Trump that rate cuts are appropriate. He was quick to add the usual caveat about the Fed being independent. “[They’ll] do what they are going to do on their own timetable”, he said.
Whatever you say, Larry. Whatever you say.