Larry Kudlow: Jobs Report Not a Recession, Fed Policy Needs Overhaul

Disappointing Jobs Report

• 📉 The latest employment report indicates that private sector jobs have been flat for three months, with manufacturing employment declining modestly over the last four months.
• ⚠️ This is described as a "stall speed jobs report," but not a recession report, as business investment and factory orders are reportedly booming.

Economic Outlook and Tax Cuts

• 🚀 The economy is presented as stronger than perceived, with expectations that middle-income workers will benefit from tax cuts on tips, overtime, and social security in the coming months.

Federal Reserve and Monetary Policy

• ⏳ Jerome Powell is criticized for being too late in lowering the Fed funds target rate, with a hope that it will reach 3% from its current 4.5% by year-end.
• 🏛️ A significant shift is occurring at the Federal Reserve, with a potential for four Trump appointees on the seven-member board by year-end, impacting its direction.
• 🧪 Treasury Secretary Scott Bessett argues in a Wall Street Journal op-ed that the Fed's monetary policy experiments over the past 15 years have gone wrong, leading to overreach, repeated forecast errors, failure to control inflation, and politicization, thus damaging Fed independence and credibility.

The Dollar's Value and Stability

• ⚖️ The dollar's value is a critical factor for price stability and economic growth, yet it has fallen significantly against a basket of currencies (CRB index) and gold pre-COVID.
• 📉 A falling dollar is unsustainable if it is to remain the world's reserve currency.
• 🔑 A steady and reliable dollar is essential for achieving price stability, which in turn is key to rapid economic growth and low unemployment.