This goes well with the comments I made early in the Retail season that the economic downturn in retail sales is not due to 'snow storms in North East' or 'Terror Alerts', but due to fact we average Americans have no money to spend. I don't feel we're doing great whoopee, and all economic indicators say it is a lie to represent America is in a boomtown economy. When Clinton ran against 'Poppy' Bush(reference to his phone number and alias found in phone book of a JFK witness who was alleged to have committed suicide the day he was to before Senate, by blowing out brains from behind with full barreled shotgun), his motto was, "It's the Economy Stupid'. The exact same issue awaits any Democrat who can come up with a way to oppose any legislation this Administration has put forth to take money from Americans, relying on the brain-washed maxim they are 'fiscally-Conservative'. Unfortunatley most all of them have voted WITH Bush on economic issues, such as the vote to give away 87 Billion in hard-earned tax moneys that could have been used for American economy. Hope they find someone soon, or they'll be voting for just another 'Republicrat' again and feel used and miserable having to defend their Candidates betrayal of campaign promises as the Republicrats do now.
Our So-Called Boom
By PAUL KRUGMAN
It was a merry Christmas for Sharper Image and Neiman Marcus, which
reported big sales increases over last year's holiday season. It was
considerably less cheery at Wal-Mart and other low-priced chains. We don't
know the final sales figures yet, but it's clear that high-end stores did
very well, while stores catering to middle- and low-income families
achieved only modest gains.
Based on these reports, you may be tempted to speculate that the economic
recovery is an exclusive party, and most people weren't invited. You'd be
Commerce Department figures reveal a startling disconnect between overall
economic growth, which has been impressive since last spring, and the
incomes of a great majority of Americans. In the third quarter of 2003, as
everyone knows, real G.D.P. rose at an annual rate of 8.2 percent. But wage
and salary income, adjusted for inflation, rose at an annual rate of only
0.8 percent. More recent data don't change the picture: in the six months
that ended in November, income from wages rose only 0.65 percent after
Why aren't workers sharing in the so-called boom? Start with jobs.
Payroll employment began rising in August, but the pace of job growth
remains modest, averaging less than 90,000 per month. That's well short of
the 225,000 jobs added per month during the Clinton years; it's even below
the roughly 150,000 jobs needed to keep up with a growing working-age
But if the number of jobs isn't rising much, aren't workers at least
earning more? You may have thought so. After all, companies have been able
to increase output without hiring more workers, thanks to the rapidly
rising output per worker. (Yes, that's a tautology.) Historically, higher
productivity has translated into rising wages. But not this time: thanks to
a weak labor market, employers have felt no pressure to share productivity
gains. Calculations by the Economic Policy Institute show real wages for
most workers flat or falling even as the economy expands.
An aside: how weak is the labor market? The measured unemployment rate of
5.9 percent isn't that high by historical standards, but there's something
funny about that number. An unusually large number of people have given up
looking for work, so they are no longer counted as unemployed, and many of
those who say they have jobs seem to be only marginally employed. Such
measures as the length of time it takes laid-off workers to get new jobs
continue to indicate the worst job market in 20 years.
So if jobs are scarce and wages are flat, who's benefiting from the
economy's expansion? The direct gains are going largely to corporate
profits, which rose at an annual rate of more than 40 percent in the third
quarter. Indirectly, that means that gains are going to stockholders, who
are the ultimate owners of corporate profits. (That is, if the gains don't
go to self-dealing executives, but let's save that topic for another day.)
Well, so what? Aren't we well on our way toward becoming what the
administration and its reliable defenders call an "ownership society," in
which everyone shares in stock market gains? Um, no. It's true that
slightly more than half of American families participate in the stock
market, either directly or through investment accounts. But most families
own at most a few thousand dollars' worth of stocks.
A good indicator of the share of increased profits that goes to different
income groups is the Congressional Budget Office's estimate of the share of
the corporate profits tax that falls, indirectly, on those groups.
According to the most recent estimate, only 8 percent of corporate taxes
were paid by the poorest 60 percent of families, while 67 percent were paid
by the richest 5 percent, and 49 percent by the richest 1 percent. ("Class
warfare!" the right shouts.) So a recovery that boosts profits but not
wages delivers the bulk of its benefits to a small, affluent minority.
The bottom line, then, is that for most Americans, current economic growth
is a form of reality TV, something interesting that is, however, happening
to other people. This may change if serious job creation ever kicks in, but
it hasn't so far.
The big question is whether a recovery that does so little for most
Americans can really be sustained. Can an economy thrive on sales of luxury
goods alone? We may soon find out.
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