CSM: Why a booming economy feels flat

[question everything]

The Christian Science Monitor - csmonitor.com

from the August 22, 2005 edition -

Why a booming economy feels flat

Personal income is one key area where workers have fallen behind, compared with past periods of strong wage growth.

By Mark Trumbull | Staff writer of The Christian Science Monitor

Think back to the last time the American economy was rapidly rolling forward: output growing more than 4 percent a year, millions of new jobs were created, and unemployment on a downward slope.

Yes, the 1990s was a golden economic era. But the description refers to the performance that began last year.

Despite continued strong economic growth, this expansion is clouded with enough complications and uncertainties that, for many, it doesn't feel like good times.

The reason? A boom in corporate profits has not yet created a job market that makes workers feel secure, economists say. Hiring hasn't skyrocketed. Worse, wages are stagnant. This paycheck squeeze may prove more worrisome than soaring oil prices and concerns over a housing bubble. Some experts worry that wage stagnation may prove more permanent this time, because of an increasingly global market for labor.


More..

http://www.csmonitor.com/2005/0822/p01s03-usec.html

[jsamuel]

1. Why having no money shouldn't keep you from believing the economy is good.

[depakid]

5. It's called GDP

The grossly disrtorted picture.

It hasn't got al that keen a relationship with what most of us would think was economic growth- it certainly doesn't measure wealth creation- and it doesn't account for suffering and a decline in the standard of living for the majority of people in the country.

See, e.g.

http://www.tompaine.com/feature2.cfm/ID/9316

[Deja Q]

2. It makes you hope that the peak oil if not environmental stories are real.

[phantom power]

3. This is really so simple.

Corporate profits are not generally invested in creating new jobs. Capital gains are not generally invested in creating new jobs.

It's the central fallacy of Supply Side economics. And it's not hard to understand, either theoretically or practically.

If I'm a rich investor, and I obtain more money, I don't ask "How can I create more jobs?" I ask "How can I preserve my investment?" My plan for preserving the investment might happen to create more jobs as a side-effect, but there are so many ways of growing an investment without creating either new businesses, or new jobs, that it's ludicrous.

[question everything]

8. Two years ago, Bush came to town to promote his tax cut

for small businesses and several of them were invited.

One of them, a sole proprietor - graphic design, or something - admitted that, yes, having his taxes reduced would allow him to buy a new machine but that, no, he was not going to hire anyone.

[troubleinwinter]

4. "...gains in the economy have gone into profits rather than wages"

[acmejack]

7. That tells you all you need to know.

And the expanding global labor market ensures our race to the bottom. Hard times, indeed.

[phantom power]

9. ...Thus proving that we learned nothing from Reaganomics.

[EVDebs]

6. What jobs ? What 'booming recovery' ?

Bush's Jobs Deficit
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=736493

And the fact that the Iraq War is costing more -- along with the fact that tax cuts to the wealthiest haven't 'primed the pump' (to use Keynsian terminology) and created the booming recovery. Supply-side 'voodoo economics' (as Shrub's daddy called it)-- all make for some head scratching for Republicans.

Lou Dobbs is right, corporate greed is killing the US economy and the outsourcing of jobs and capital is part and parcel of the Republican agenda. Too bad that many Democrats follow that same agenda.