Larry Kudlow: The Untold Impact of Declining Energy Prices
As we step into a new year, the stock markets are already reaching unprecedented heights. The Dow is on the verge of hitting 50,000, while the S&P 500 could surpass 7,000. Interestingly, the mainstream media tends to overlook this positive trend, but approximately 135 million American investors are certainly taking notice, including those associated with left-leaning union pension funds. The narrative is clear: stocks are rising, taxes are decreasing, federal regulations are being relaxed, and energy prices are falling.
When we consider the overall economic landscape, we see a significant 25% drop in oil prices, which has a ripple effect throughout the economy. This decline is translating into higher take-home pay for middle-class families and increased profits for businesses nationwide.
Tax cuts are beneficial for profits, and deregulation further enhances this profitability. The creation of 700,000 new private sector jobs, coupled with a nearly 300,000 reduction in federal government positions, signals a robust environment for profits. Profits are the lifeblood of successful companies, leading to more job opportunities and higher wages. This is a point I’ve emphasized before, and it remains a cornerstone of my economic philosophy.
Heritage Foundation chief economist EJ Antoni and Forbes Media chairman Steve Forbes discuss how energy costs ripple through the economy, the capture of Venezuelan dictator Nicolás Maduro, and more on ‘Kudlow.’
Consider the everyday items that benefit from lower oil and gasoline prices: aspirin, ballpoint pens, cell phones, coffee makers, computer accessories, and even dog collars. The list goes on, including eyeglasses, fertilizers, golf equipment, and pharmaceuticals. The drop in oil prices is arguably the greatest story never told.
Looking ahead, Consumer Price Index (CPI) reports may even show negative figures in the coming months. While I’m not suggesting this will happen every month, the potential for negative prints exists due to declining energy prices. For instance, the averages for October and November were just 0.10%, significantly below the Federal Reserve’s target. This scenario means that wages will have even more purchasing power when prices are falling, potentially leading to a real GDP growth rate of 5%, 6%, or even 7%. While this won’t occur every quarter or year, the impact of decreasing energy costs and inflation can significantly elevate the economy.
Currently, we are witnessing a business boom, and tax refunds are on the horizon. Additionally, Mr. Trump’s focus on new factories is a strategic move to sidestep tariffs, create jobs, and boost wages while keeping prices in check. This approach also contributes to building stock market wealth. Falling energy prices could play a pivotal role in the upcoming midterms, provided the GOP effectively communicates this narrative. It truly is the greatest story never told.
As we step into a new year, the stock markets are already reaching unprecedented heights. The Dow is on the verge of hitting 50,000, while the S&P 500 could surpass 7,000. Interestingly, the mainstream media tends to overlook this positive trend, but approximately 135 million American investors are certainly taking notice, including those associated with left-leaning union pension funds. The narrative is clear: stocks are rising, taxes are decreasing, federal regulations are being relaxed, and energy prices are falling.
When we consider the overall economic landscape, we see a significant 25% drop in oil prices, which has a ripple effect throughout the economy. This decline is translating into higher take-home pay for middle-class families and increased profits for businesses nationwide.
Tax cuts are beneficial for profits, and deregulation further enhances this profitability. The creation of 700,000 new private sector jobs, coupled with a nearly 300,000 reduction in federal government positions, signals a robust environment for profits. Profits are the lifeblood of successful companies, leading to more job opportunities and higher wages. This is a point I’ve emphasized before, and it remains a cornerstone of my economic philosophy.
Heritage Foundation chief economist EJ Antoni and Forbes Media chairman Steve Forbes discuss how energy costs ripple through the economy, the capture of Venezuelan dictator Nicolás Maduro, and more on ‘Kudlow.’
Consider the everyday items that benefit from lower oil and gasoline prices: aspirin, ballpoint pens, cell phones, coffee makers, computer accessories, and even dog collars. The list goes on, including eyeglasses, fertilizers, golf equipment, and pharmaceuticals. The drop in oil prices is arguably the greatest story never told.
Looking ahead, Consumer Price Index (CPI) reports may even show negative figures in the coming months. While I’m not suggesting this will happen every month, the potential for negative prints exists due to declining energy prices. For instance, the averages for October and November were just 0.10%, significantly below the Federal Reserve’s target. This scenario means that wages will have even more purchasing power when prices are falling, potentially leading to a real GDP growth rate of 5%, 6%, or even 7%. While this won’t occur every quarter or year, the impact of decreasing energy costs and inflation can significantly elevate the economy.
Currently, we are witnessing a business boom, and tax refunds are on the horizon. Additionally, Mr. Trump’s focus on new factories is a strategic move to sidestep tariffs, create jobs, and boost wages while keeping prices in check. This approach also contributes to building stock market wealth. Falling energy prices could play a pivotal role in the upcoming midterms, provided the GOP effectively communicates this narrative. It truly is the greatest story never told.
