Hmm, who besides Larry Kudlow was caught by surprise by the Great Recession?

I can name several that weren’t caught by surprise, and a few that did predict an evitable crash. That would be any economist who understood basic dual entry accounting and sectoral balances. It would seem that draining the money supply down with surplus budgets is not good for a consumption economy. When you add to that a void in safe investments because surpluses don’t generate Treasury bonds and an investor class running with scissors from a lack of adult supervision the results were fairly clear well in advance.

After Clinton’s surplus budgets, Bush pulled the economy only partially out of the tank with deficit spending, However, as conservatives are prone to, the distribution of those were not aimed at the Main St economy and the bonds produced didn’t satisfy the economy’s desire to save with so much of the actual deficit spending “off the books” at the Pentagon, so the next best thing was the US mortgage market.

A few imaginative derivatives later the market was far overvalued and the first hiccup in the meteoric rise in demand caused a chain of defaults. The rest is history, but only added to the six previous times deficits were sustained below 3% of GDP for any length of time. Every one ended badly in deep recession or depression, but hey, correlation isn’t proof of causation so deny, deny, deny. Trump’s deficits and insistence on low rates from the Fed may be the only thing holding it together at the moment. I seriously doubt that he understands that though.