LARRY KUDLOW: Booming in Detroit

President Trump gave an optimistic stemwinder of a speech, in front of the Detroit Economic Club, proclaiming a Trump boom that has started sooner and come on faster than any of the lefty critics are ever willing to admit. That’s why I call it Booming at Detroit.

Here’s how he began the speech: "Under our administration, growth is exploding. Productivity is soaring. Investment is booming. Incomes are rising. Inflation is defeated. America is respected again. Like never before." And in usual Trumpian style, after taking about an hour or so, having touched on all the bases, here’s how he concluded his Booming at Detroit speech: "My spirit is restored. Inflation is stopped. Wages are up, prices are down. Our economy is booming, like I think you’ll see soon, like never before."

I was delighted to hear him speak at the Detroit Economic Club. I was with him on the plane back in 2016 when he first spoke out there that summer. And you know, that’s the home of the heartland, and it’s having a very big comeback. 

I have said before, Trumpian policies to cut taxes, deregulate business, "drill, baby drill," and reciprocal trade, are working. With any luck, the fourth quarter of this year could see GDP growth after inflation of 5 percent, and the three Trump quarters that began last spring, will produce better than 3 percent economic growth, maybe 4 percent.

Businesses are booming, new factories are being built, productivity is staggering, stock markets are record-setting. The president is right, by the way, that inflation is down and growth is up. Energy prices are down and growth is up. It permeates the economy. He’s right, in the fourth quarter, the topline CPI is only 2.1 percent annually. The core rate, ex. food and energy, 1.6 percent at an annual rate.

The Fed’s targets are being met, there is room for easier money. And I’ll submit that the full impact of the 25 percent drop in energy, which permeates the entire economy, has not yet been nearly completely filled. And the Fed-phobia about tariff inflation has just not panned out, nowhere to be found.

In the fourth quarter goods prices are up only 1.4 percent annually. And core goods are up only 0.2 percent. That’s remarkable. No tariff inflation.

And then on the inflation front, unit labor costs are rock bottom, just over 1 percent unit labor costs in recent quarters. That basically means wages have gone up, but the workforce has earned their pay hikes with increased productivity. It’s the perfect combination.

Mr. Trump was right, the Fed’s Jerome Powell was wrong. What else is new?

That’s why I don’t want to make a martyr out of Mr. Powell. He’s a lousy Fed chairman, but not a criminal. Just a bad chairman. The sooner he goes, the better we will all be. I don’t want him to be there for a nano-second longer than he has to be.