L arry Kudlow, a familiar face on the CNBC financial network, is one of those entertaining analysts who are interesting to listen to. Kudlow has strong opinions about politics and the economy, and doesn’t hesitate to voice them in his nasal New York twang.
Now that President Trump has hired Kudlow as his National Economic Council director, it’s worth looking at Kudlow’s record at forecasting.
According to The Washington Post, it’s pretty dismal.
“Kudlow’s tendency to err has been nearly flawless,” columnist Dana Milbank wrote last week. Milbank listed several examples, dating back 25 years, when Kudlow’s forecasts were the exact opposite of what happened.
His most obvious error was in 2007-08, when a housing bubble burst and visited The Great Recession on the country.
In December 2007, when things looked grim, Kudlow wrote that gloomy forecasters would wind up with egg on their faces, that positive news on housing would cushion the decline in home sales and prices, and that there was no recession in sight.
He repeated his upbeat predictions in February 2008 and May 2008, even though markets continued to tank for months afterward.
That call was his biggest miss. But there were plenty of others.
In 1993, he said a proposed tax increase by President Clinton would “depress the economy’s long-run potential.” Instead, the dot-com boom fueled an eight-year expansion.
In 2001, he said President Bush’s tax cuts would generate more taxes and budget surpluses. But tax revenues fell and deficits rose.
In 2009, he said President Obama’s “war” on investors and businesses could increase inflation. But inflation stayed low while stock markets more than recovered from the 2008 crash.
There’s an obvious trend here. Kudlow is bullish on Republicans and lower taxes, and he is critical of Democrats, who prefer higher taxes.
It is certainly fair to say there were other factors involved in Kudlow’s forecasting errors — the dot-coms in 1993, the Sept. 11 terrorist attacks in 2001 and the recession recovery in 2009. But it’s undeniable that he was badly wrong each time.
He also was part of another miscalculation at the state level. According to New York Magazine, Kudlow was one of the advisors who in 2012 convinced Kansas Gov. Sam Brownback to push large tax cuts through the Legislature in the hope of producing faster growth. But the cuts did not perform as expected, and last year Republican lawmakers started raising revenue.
As Milbank joked, even a stopped clock is right twice a day. So maybe Kudlow is due for a good prediction. It would be nice to see him get one right.
He has praised the tax cuts that President Trump has signed into law, predicting the economy could grow by as much as 5 percent annually, which would produce larger tax revenues.
We shall see. The economy has done pretty well since Trump took office.
Kudlow thinks this trend will continue. He’d better not jinx it.
