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The 280-Point Message

8:44 AM, Jun 2, 2011 • By DANIEL HALPER
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Larry Kudlow writes

With a flamboyant downgrade of the outlook for economic growth, jobs and profits, Wednesday's 280-point Dow plunge to launch the so-called June stock swoon is a warning shot across the bow.

The Dow tanked alongside a batch of dismal economic data. The ISM manufacturing index, ADP employment, Case-Shiller home prices and consumer confidence are all pointing to 2 percent growth or less, rather than the kind of 5 percent growth we ought to be getting coming out of a deep recession. The economy now looks like a Government Motors engine that's stalling out. Or perhaps, with energy and food inflation, and housing deflation at the same time, the economy is acting like a pinball machine on permanent tilt.

There's a key message here: Big-government stimulus never works….

No, we're not going into a double-dip recession. The most important indicator is the Treasury yield curve, which is still very steeply sloped. And businesses are profitable. Those profits have been the backbone of what little growth we've had in the last two years. And they're the mother's milk of the stock market.

But the point is, without real growth policies, there's not much to cheer about in the market or the economy. We're muddling along. It could even be called a growth recession.

Wednesday's 280-point Dow drop is cry for help. Is anybody listening?

Whole thing here.

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