Larry Kudlow: Trump is the 'pro-business guy'
Gxstocks host Larry Kudlow says if Americans are worried about a stock market meltdown, they must think about who they will trust to lead the country on 'Kudlow.'
Recession risk grows larger and stocks are getting clobbered. Investors who were irrationally exuberant only a few weeks ago, are now running for the hills. Stocks are getting clobbered with the Dow down 2,000 points the last three trading days. There may also be some politics to this story, as chameleon Kamala Harris is polling better than Joe Biden was, as low a bar as that may be, but no matter what she says, we know she hates business.
The real meat and potatoes of the stock slamdown is rising unemployment, coupled with falling consumer sentiment, and an overall recession-like weakening of the economy. The data are incomplete, but without question, a nearly 1% point rise in the unemployment rate this year strongly suggests the economy is on the front-end of a recession.
Just last month, 352,000 people joined the unemployment lines. Actually, over the past year, the number of unemployed has risen 1.3 million.
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While the jump to 4.3% in the last four months is worrisome, an even broader measure of labor market weakness is the so-called labor impairment rate, or the underemployment rate, which has leapfrogged to 7.8%. That includes part-timers who want full-time work, plus discouraged workers, and that's the soft underbelly of the Biden-Harris labor market.
Meanwhile, over the last year, Biden-Harris policies have led to half a million more part-time workers, and an actual negative half million fall in full-time.
Plus, their catastrophic open border policies have led to an increase in 1.3 million foreign-born workers and a 1.2 million decline in native-born American workers. In other words, it's been a far shakier economy than most of the media has ever been willing to admit.
Let's not forget a recessionary first half of 2022, when real GDP fell two consecutive quarters, mostly from inflation shock. So much of this can be traced to the affordability crisis, where the Biden-Harris consumer price index has gone up 20% over their full term, while hourly wages have risen only 17%.
In other words, for three and a half years plus, typical working families of all different stripes have suffered a pay cut in what Ronald Reagan used to call take-home pay and their taxes have gone up, not down. It's too expensive for them to live in the Biden-Harris economy and Biden-Harris fiscal policy has spent and borrowed like there's no tomorrow.
Now, other recessionary indicators: plunging home building and sales, even weaker consumer spending, and continued declines in factory surveys. Stock markets hate recessions, because recession drives down profits, and profits are the mother's milk of stocks and the lifeblood of the economy.
As recession fears rise, everyone is blaming the Fed, but the Fed has been pumping in money ever since the financial meltdown in 2008 and Wall Street loves easy money.
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Technically, investor sentiment is vastly too high, and that sets up a bear market on top of the weak economy. Also, the $20 trillion yen carry trade, where investors in Wall Street and Tokyo borrowed ultra-cheap yen to invest in the so-called magnificent tech stocks, has come to an end.
With 92 days left in the presidential election, the question is: who do you trust to pilot the American economy out of the danger zone? No matter how many times Kamala Harris tries to cover up her radical policies, she's still a big government socialist who hates business.
She will continue the Biden-Harris war on fossil fuels and big government socialism. It’s anti-business, no matter large or small. Mr. Trump, on the other hand, is the pro-business guy who understands you can't have employment without employers. So, if you're worried about an economic or stock market meltdown, who are you going to trust? I'm taking the business guy.
This article is adapted from Larry Kudlow’s opening commentary on the August 5, 2024, edition of "Kudlow."
