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Post by graybeard on Mar 31, 2011 8:21:09 GMT -6
www.RobertReich.org has his latest: The Truth About the Economy that Nobody In Washington Or On Wall Street Will Admit: We’re Heading Back Toward a Double Dip. Wednesday, March 30, 2011
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Post by unlawflcombatnt on Mar 31, 2011 20:35:59 GMT -6
Reich's latest article certainly is insightful. And since he wrote at the bottom of the article the word "share," I'll do so here.
Also, this is the 1st time I can remember seeing Reich blame Democrats as well as Republicans for our economic demise.
by Robert Reich:
"We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.
Consumers are 70% of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.
The Reuters/University of Michigan survey shows a 10 point decline in March – the 10th largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a 5-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.
Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.
What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment....
But isn’t the economy growing again – by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent.
Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7%. The next year it grew over 8%. In 1936 it grew a whopping 14.1%.
Add 2 other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. [The supply of workers is exceeding the demand, predictably reducing the "price" of labor.]
Housing is dropping because of the ever-larger number of homes people have walked away from because they can’t pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer.
There’s no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation. State and local governments are slashing their budgets by roughly $110 billion this year. The federal stimulus is ending, and the federal government will end up cutting some $30 billion from this year’s budget....
So why aren’t we getting the truth about the economy? For one thing, Wall Street is buoyant – and most financial news you hear comes from the Street. Wall Street profits soared to $426.5 billion last quarter, according to the Commerce Department. (That gain more than offset a drop in the profits of non-financial domestic companies.) Anyone who believes the Dodd-Frank financial reform bill put a stop to the Street’s creativity hasn’t been watching.
To the extent non-financial companies are doing well, they’re making most of their money abroad. Since 1992, for example, G.E.’s offshore profits have risen $92 billion, from $15 billion (which is one reason it pays no U.S. taxes). In fact, the only group that’s optimistic about the future are CEOs of big American companies. The Business Roundtable’s economic outlook index, which surveys 142 CEOs, is now at its highest point since it began in 2002.
Washington, meanwhile, doesn’t want to sound the economic alarm. The White House and most Democrats want Americans to believe the economy is on an upswing.
Republicans, for their part, worry that if they tell it like it is Americans will want government to do more rather than less. They’d rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit we’ll get more jobs and higher wages).
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Post by unlawflcombatnt on Apr 1, 2011 0:17:17 GMT -6
As Reich said in his post, real inflation-adjusted hourly wages are slightly less than they were 2 years ago. But this is based on the understated inflation rate cooked up by the Bureau of Labor Statistics. However, the actual decline in "real" wages has been much greater.
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Post by jeffolie on Apr 1, 2011 13:30:03 GMT -6
As Reich said in his post, real inflation-adjusted hourly wages are slightly less than they were 2 years ago. But this is based on the understated inflation rate cooked up by the Bureau of Labor Statistics. However, the actual decline in "real" wages has been much greater. I agree and this is why in my January 1st jeffolie 2011 predictions I made screwflation my top topic. Government lies and government economic numbers are lies including GDP and inflation. Inflation is 42% weighted by housing which is declining in value and collapsing in the average American's shrinking wealth as home equity declines consistently. Using government number the economy is growing, while average Americans are losing ground to higher expenses for everything they buy now with much higher prices coming in the near future for gasoline, clothing, health insurance, food in general (with the exception of fresh vegetables as new crops of fresh vegetables will have lower prices than the exceptionally high prices that happened from freezing and ruining fresh vegetable crops). Wages of newly hired workers are low. Adjusted for high gasoline, food, clothing, paying for health insurance, contributing to pensions, etc these newly hired workers are not keeping up. Newly hired workers have no unions, no collective bargaining to provide a package of benefits so they merely have new paychecks missing benefits or decent retirement programs that leave them screwed, hence screwflation dominates. Manufacturing volumes grow but jobs do not as 'productivity gains' result in a jobless GDP gain. Public sector workers loses jobs. Labor participation remains at low, low levels.
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Post by unlawflcombatnt on Apr 2, 2011 1:20:54 GMT -6
The Government likes to strip out food, housing, and fuel costs when it computes inflation. However, these are the biggest expenditure items for most Americans--and the ones they usually cannot reduce at all.
Thus for the fixed quantity of expenditures for most Americans--the basic necessities--prices are skyrocketing.
For purely discretionary toys and electronic gadgetry--like cell phones, ipods, ipads, big screen TVs, and other completely optional crap--prices have not been rising as fast. This seems perfectly logical and explainable considering the prices of all essential items ARE increasing. That results in there being that much less money available to purchase these optional items. Of course there's not going to be much inflation in these optional items when there is less money to spend on them.
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