Monday, June 05, 2006

Arthur Laffer: U.S. is world's highest performing economy

The U.S. economy is the highest performing economy in the world. And it's on track to stay that way, said economist Arthur Laffer in a June 1, 2006 presentation to the Montreal CFA Society.

How does Laffer characterize the current U.S. economy?
  • Fourteen consecutive quarters of real GDP growth mostly in the range of 3%-4%
  • 4.7% unemployment rate
  • Profits as percentage of GDP are at highest ever levels (Note: Laffer uses Dept. of Commerce profit statistics)
  • Spectacular productivity growth
  • Extremely low inflation, with 10-year bond around 5%
Furthermore, Laffer sees no serious threats from the four policy areas that he considers "killers of bull markets": fiscal, monetary, trade and incomes policy.

Stock prices are way too low, given the economics of the U.S., said Laffer.



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