The problems with China's economy are worse than anybody originally thought, says noted economist Larry Kudlow, but there's no need to panic.
The recent falls in the U.S. stock market are no more than an "overdue" correction, Kudlow said Sunday on "The Cats Roundtable" on AM 970 in New York,
as well as a few things, such as China, "sticking in the craw of stocks."
"I myself don't see any catastrophe out there, I don't think the banking system's going down the drain, I don't see a recession yet. So I don't think this is the end of the world," Kudlow told host John Catsimatidis.
Profits, the "mother's milk of stocks" and the "lifeblood of the economy" have been flat for more than a year, Kudlow said, and that isn't helping the market. Neither is the Federal Reserve's desire to raise interest rates.
The third issue is China, he said.
"China's not the whole world, but China is important, and it looks like the China story is worse than anybody thought. We don't know where the bottom is," Kudlow said.
Rather than a rate hike, the economy really needs a corporate tax cut and a regulatory rollback on things like Obamacare and Dodd-Frank, he said.
Kudlow said the other factor affecting the economy is the low price of oil. It's great for consumers, but has a deflationary effect in some sectors.
He said he doesn't know what the correct price of a barrel of oil should be, but added, "I can tell you it ain't gonna be $100. And it's not gonna be $80."
With fracking becoming more economical, the price likely won't top $60 per barrel, and won't see $100 again "in our lifetime," Kudlow said.
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