Less than a year ago, we labeled the current U.S. expansion the "Rodney Dangerfield economy"--because it "gets no respect." Ten months later our now $12.5 trillion economy has only maintained its strength even as it still gets disparaged in the media, which continues to fret about the fragility of what has undeniably been a resilient expansion. There are a few policy lessons here, assuming Washington is awake.
The 3.5% to 4% rate of growth in 2005 has been especially remarkable given eight Federal Reserve Board interest rate hikes, oil prices as high as $70 a barrel, and one of the most devastating natural disasters in American history. Yes, fourth quarter GDP may come in softer thanks to limping auto sales, but the entrepreneurial U.S. economy will still have grown at about twice the pace of Old Europe in 2005. As economist Michael Darda of MKM Partners, puts it: "This is the most derided and ridiculed growth cycle in post-World War II history, even though by many measures, including productivity and corporate profits, it's one of the most impressive."
The full editorial gives some details on 2005, and looks ahead to 2006.
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