October 31, 2003

#128: Day to dread

P. Krugman

October 30, 2003 was the kind of day we have been predicting for over a year and a day Paul Krugman has been dreading for months. It's "read'em and weep" time over at PK headquarters. The US economy is roaring and job creation will follow shortly. All the "I hope I'm wrong" and "maybe they'll get lucky" nonsense from Krugman is swept away. There is nothing negative in the 3rd Quarter GDP data. The overall growth rate was stupendous, 7.2 percent, and all sectors were equally impressive. The real sleeper was non-farm inventory investment which was down again. This means the long awaited re-stocking purchases, powerful growth producers in themselves, still lie ahead. Also we note that large military spending, the nay-sayers refrain after the 2nd quarter GDP report, returned to modest levels in the 3rd quarter. It was the private sector that carried the load.

Instead of reading Krugman's nit-picking column A Big Quarter (10/31/03) we recommend just skipping down to his standard "bail-out" line.

"Still, it's possible that we really have reached a turning point."
Yoooooo bet, PK. Yoooo bet.

Krugman finished up by laying down a jobs marker by which HE will evaluate the Bush first term.

"To put it more bluntly: it would be quite a trick to run the biggest budget deficit in the history of the planet, and still end a presidential term with fewer jobs than when you started. And despite yesterday's good news, that's a trick President Bush still seems likely to pull off."
We agree Bush probably won't have job levels up to the bubble standards of early 2000 by election time, but he'll come close enough to carry 40 states including Florida, Pennsylvania, Ohio and Michigan.

Like we said: read'em and weep!

[The Truth Squad is a group of economists who have long marveled at the writings of Paul Krugman. The Squad Reports are synopses of their discussions. ]

Posted by John Weidner at October 31, 2003 6:37 AM
Weblog by John Weidner