LARRY KUDLOW: A new Goldilocks -- Strong growth and falling prices

• Online retail sales jumped 1.9% in June with non-store retailers showing 21% annual growth over the last 3 months; car sales rose more than 20% annually in Q2
• Consumer and producer price levels actually declined month-over-month in June while unemployment claims remain at rock-bottom levels
• Kudlow declares 'the Phillips Curve is dead,' arguing there is no trade-off between growth and inflation due to technology-driven productivity gains in AI, quantum computing, and advanced manufacturing

Summary: New Goldilocks Economy Emerges with Strong Growth and Deflation

Larry Kudlow argues the U.S. economy is entering a "new Goldilocks" phase characterized by strong growth combined with falling prices, redefining the traditional "not too hot, not too cold" concept.

Key Economic Data:

• Consumer and producer prices declined in June month-over-month
• Core retail sales rose 8% annually over the past three months
• Online/non-store retail sales jumped 1.9% in June, with 21% annual growth over three months
• Car sales increased more than 20% annually in Q2
• Weekly initial unemployment claims remain at rock-bottom levels

Market Implications:

Kudlow declares the Phillips Curve—the traditional tradeoff between growth and inflation—is "dead." The current environment shows robust economic expansion without triggering inflation, driven by supply-side factors rather than demand constraints.

Growth Drivers:

The economy is being propelled by technological breakthroughs including:

• Artificial intelligence
• Quantum computing
• Advanced manufacturing
• Space technology

These innovations are generating surging productivity growth, which keeps business costs and consumer prices contained while supporting output expansion.

Policy Support:

Pro-growth fiscal and monetary policies are reinforcing the positive trend, including a strong dollar, new Federal Reserve regime, lower taxes, and reduced regulations.

Kudlow compares the current period to the 1990s economic boom but suggests today's conditions are even stronger. He warns pessimists are misreading the economy and will be proven wrong by emerging data, with manufacturing reports from New York and Philadelphia already showing strength.