LARRY KUDLOW: Trump's strong growth at low inflation should put the fake news to rest

Larry Kudlow argues that President Trump’s first eight months have delivered strong growth with low inflation, citing grocery prices rising at a 2.1% annual rate (1.4% cumulative) versus a 5.4% annual rate (23% cumulative) under Biden, typical family wages up over 4%—outpacing a 2.5% overall inflation rate—and GDP up 3.8% in Q1 with the Atlanta Fed projecting 4.1% for Q2. He attributes the improvement to Trump’s tax cuts, deregulation, expanded energy production and reciprocal trade policies (supply-side growth), contends these trends are restoring real wages and affordability, and frames media and Democratic criticism as politically motivated, noting public support for the GOP stance during the government shutdown was about 10 points higher.

Analysis

The piece cites specific macro metrics: grocery prices during President Trump’s first eight months rose at a 2.1% annual rate (1.4% cumulative) versus a 5.4% annual rate (23% cumulative) under President Biden, typical family wages are reported as up over 4%, and headline inflation is cited at 2.5% annually. It also highlights GDP growth of 3.8% annualized in Q1 with the Atlanta Fed projecting a 4.1% annualized Q2, attributing the combination of stronger growth and lower inflation to tax cuts, deregulation, expanded energy output and reciprocal trade policies.

The article argues these data point to an improvement in real wages and affordability because wages are rising faster than both grocery inflation and headline CPI, while noting temporary food outliers such as beef and eggs can distort short-run CPI readings. The summary signals classify the tone as moderately positive with a low market impact score (0.25), implying the commentary is bullish but may have limited incremental market-moving force.

Key risks and caveats in the article itself are short sample duration and component volatility: eight months of data for the administration is a limited window and food-price spikes are characterized as transitory, meaning near-term CPI swings could reverse. The author’s political framing (claims about media criticism and the government shutdown) suggests potential policy- or politics-driven volatility that investors should monitor as an exogenous risk to the economic narrative.

Key Decisions for Investors

• Consider a modest pro-cyclical tilt to portfolios that benefit from above-trend GDP and contained inflation while keeping position sizes conservative given the short eight-month sample and low market-impact score
• Monitor incoming CPI detail—especially grocery subcomponents such as beef and eggs—and monthly wage data plus Atlanta Fed GDP revisions as primary triggers to reassess exposure
• Maintain tactical political-risk hedges (e.g., reduce duration or use options strategies) to protect against policy-driven volatility that could reverse the narrative