The Energy Tax Cut Mustard Seed
A Commentary By Lawrence Kudlow
Crumbling energy prices have created a profoundly positive tax cut effect for U.S. consumers across-the-board. That is the key catalyst behind today’s sharp upward revision to January’s retail sales report from 1 percent to 1.8 percent. It’s also the catalyst behind the better than expected sales report for the month of February.
Consumer spending on energy dropped $211 billion from the July peak through January (latest data available). Inflation has basically dropped to zero. The existing level of income in this economy is worth significantly more. That means the money in consumers’ wallets travels further. And that’s what is propelling this welcome pickup in consumer spending.
I call it the energy tax cut mustard seed. And it’s going to pave the way for economic recovery later this year.
COPYRIGHT 2009 CREATORS SYNDICATE INC.
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Views expressed in this column are those of the author, not those of Rasmussen Reports.
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