Rich Karlgaard:
Sorry, grinches, but the U.S. economy looks like Santa’s sled is being powered by GE/Rolls-Royce jet engines. The third quarter clocked a 3.8% GDP growth rate. The third quarter! Recall: This was the quarter of Katrina, Rita and $70-a-barrel oil. The buckle-your-belt, we’re-going-down quarter. But we didn’t go down.

We went up. So did the stock market–up 5% since President Bush raised Ben Bernanke to Alan Greenspan’s throne at the Fed.

Next year? It looks good. Thanks to Microsoft and its expected release of Windows Vista, tech spending will rise. An 11,000 Dow will lift CEOs’ spirits and open their pockets. Larger portions of that $2 trillion cash pile now sitting idly on American corporate balance sheets will pour back into productive investment.

Worries? Inflation. Signs are mixed–oil is down; gold, still up–but this column’s favorite Wall Street economist, David Malpass, discounts the inflation threat. Darker clouds loom, says Malpass. Watch to see if Congress has the guts to extend the 2003 tax cuts. These pro-investment cuts expire at the end of 2008. Failure to extend them will be tantamount to a 33% tax hike on capital gains and a 133% bump on dividends. The market won’t like that. On the other hand, if Congress makes the cuts permanent or extends them to 2010, the Dow will go to 12,000.

More here.