Larry Kudlow is calling out the doom-and-gloom crowd on Wall Street and in the media — and he’s got the numbers to back it up.
On his Wednesday broadcast of Kudlow on Fox Business, the former Trump economic advisor pushed back hard against growing speculation that America is slipping into a recession. According to Kudlow, the left-wing media and panicked Wall Street analysts are completely misreading the latest GDP numbers — and ignoring the real momentum building under the surface.
“The liberal press and their pals on Wall Street are talking about recession — because the first quarter GDP was scored with a slight decline of three-tenths of 1 percent,” Kudlow said. “Yet if you look under the hood of the GDP report… what you actually come up with is a rather strong economy, that’s growing at something like 3 percent.”
Kudlow pointed out that the headline number — a 0.3% dip in GDP — doesn’t tell the whole story. Instead, he focused on “core GDP”, which strips away the temporary noise from things like inventories, government spending, and international trade quirks. This number, officially called real final sales to private domestic purchasers, paints a much healthier picture: it shows a 3% growth rate in the first quarter.
“Mr. Trump has barely begun, but take a look already at core GDP… you see an actual increase in the first-quarter economy — of 3 percent, no less,” Kudlow said.
And why is that happening? Kudlow believes it’s because businesses are already preparing for the economic boost they know is coming from Trump’s tax reform package.
Far from a recession signal, business investment exploded in the first quarter:
- Business fixed investment: up nearly 10%
- Business equipment and machinery: up 22.5%
These are strong indicators of growing productivity, future job creation, and wage increases — not signs of a struggling economy.
“There’s no recession there,” Kudlow emphasized.
The surge, he said, is fueled by anticipation of Trump’s pro-growth tax policy, which includes:
- 100% expensing for new equipment and buildings (retroactive to January 20)
- Lower tax rates on domestic manufacturing
- Personal tax cuts for workers’ tips, overtime, and seniors’ Social Security
“So, what’s actually happening is that businesses are front-running the big beautiful tax cut that will be coming their way,” Kudlow said. “It’s a phenomenal story. It’s a story of reshoring.”
Kudlow also pointed to promising news on the inflation front. In March:
- The PCE price index (the Fed’s preferred inflation metric) was flat
- Core PCE also showed zero inflation
- The Consumer Price Index actually declined by 0.1%
“All of this inflation progress sets up a Federal Reserve cut,” he said. “That’s right, a rate cut should be coming.”
Lower interest rates paired with tax cuts? That’s rocket fuel for economic growth.
Kudlow wasn’t shy about criticizing how the government calculates GDP. He flagged what he sees as a glaring error in how imports and inventories were recorded.
According to the Commerce Department, imports jumped by $333 billion in Q1 — but only $140 billion showed up in inventory increases. That leaves almost $200 billion unaccounted for.
“There’s a gap. Where’d those trade imports go?” he asked. “Did the roughly $200 billion gap between imports and inventories just evaporate? The pencil pushers over at the commerce department clearly can’t count.”
When Kudlow adjusted for this discrepancy, he found that actual GDP growth could be closer to 3.2% — not the negative number making headlines.
While the liberal press runs with the “recession” narrative, Kudlow sees something very different: an American economy on the brink of a strong comeback — powered by Trump’s tax cuts, pro-business policies, and a return to common-sense leadership.
“That sets up an economy boosted by tax cuts and deregulation that can roar — perhaps in the second quarter, but certainly by the second half of the year and well into 2026,” Kudlow concluded.
