Today we'll touch on several bases, as I'm often known to do. We will start with the latest news on the economy, which is decidedly upbeat, with GDP coming in well above-trend for the last two quarters. The question is whether the latest two quarters of above-average growth are a sign of more good things to come, or are they just the catch-up results of the disappointing 1Q decline due to the severe winter weather?
Even with the strong growth in the 2Q and 3Q, if we look back further, say to 2010, GDP growth over that period is still below trend at around 2.5% - which is unexceptional. So it remains to be seen if the economy is fully back on track.
Some argue that the surge in the economy of late is largely the result of the huge decline in oil and gasoline prices. No doubt that has been a significant factor. Some analysts estimate that the drop in oil prices from above $100 a barrel to $67 is the equivalent of a $125 billion tax cut, which is a significant boost to the economy. And most forecasters believe that oil prices will remain low for some time to come, as I will discuss today.
Finally, I can't help but comment on the deluge of unpopular actions taken by President Obama in just the last month. Unlike most recent presidents who suffered such a defeat in the mid-terms – including Reagan, Clinton and Bush(43) – and then compromised with the opposition, Obama is doubling-down on his unpopular policies. Even worse, he says he's not done yet and promised to veto any bill to build the Keystone XL pipeline.
To me, this rash of controversial decisions amounts to a “temper tantrum” on the part of the president, in reaction to the drubbing that the Democrats suffered in the mid-term elections. I'll share my thoughts on why this is happening now as we go along today.