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Post by unlawflcombatnt on May 1, 2007 4:12:53 GMT -6
Yesterday's Personal Income & Spending showed a monthly DECLINE in real Personal Consumption Spending of -0.2%. The report was deceptively interpreted as "positive" economic news, though even the "nominal" (non inflation-adjusted) increase of 0.3% was only 1/2 the of the 0.6% increase predicted. Though nominal wage & salaries increased 0.7%, the Consumer Price Index increased 0.9% for the month of March on an annualized rate. Below is a copy of Monday's Personal Income & Spending Report from Briefing.com. Previous numbers are in parenthesis next to current numbers. The "real," inflation adjusted numbers are underlined in red. ![](http://i27.photobucket.com/albums/c190/unlawflcombatnt/4-30-07grphPersInc-Act2-X.gif) It appears that spending is finally starting to decline as result of declining home equity-financed spending combined with stagnant real wage growth. The housing bubble is bursting, and there's nothing on the horizon to take its place. The 1st quarter GDP growth of only 1.3% is not surprising, given the decline in real consumer spending. And this decline was predictable, given the combination of declining home equity extraction and stagnant real wages. The only things rising are prices and Corporate media propaganda.
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Post by blueneck on May 1, 2007 4:25:45 GMT -6
We are seeing the return of "stagflation". The last time we had this was the result of the then failed economic policies of republican administrations, Nixon and Ford back in the 70's
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Post by unlawflcombatnt on May 1, 2007 14:25:50 GMT -6
We are seeing the return of "stagflation". The last time we had this was the result of the then failed economic policies of republican administrations, Nixon and Ford back in the 70's And the alleged "cure" for this was high-end, supply-side tax cuts. In this case, those tax cuts were implemented over 6 years ago, and have been proven to do almost nothing to increase capital investment. In fact, the extra capital (from tax cuts and cheap borrowing) went into non-productive investments such as debt purchase, housing, and "innovative" financial instruments. The easy money has done little to create jobs or increase production, but has done much to increase inflation. The increase in the money supply created by financial "innovation" does nothing to create real wealth. It just artificially inflates assets, and transfers risk away from risk-takers and on to non-risk takers. And if further redistributes wealth upwards to the investor class who have nothing left to invest in besides paper assets & debt. Our economy is producing less real wealth, and more "real" debt. Consumer spending increases are being financed by ever increasing debt levels in the face of stagnant real wages. Real wages have been kept down by the ever decreasing demand for labor from outsourcing production work to foreign countries, and by the ever increasing supply of labor from illegal immigration and H1B visa increases. As debt-financed consumer spending declines, production demand will also decline. This will reduce labor demand, further depressing wages and employment. In turn, this will still further reduce production demand and labor demand. The declining production demand will reduce capital investment opportunities, leaving still more capital available for non-productive and counter-productive investment (like stock buybacks, mergers, Congressional lobbying, dissemination of economic propaganda, Right-Wing think tanks, and building production facilities in foreign countries.) We can only hope that tried and dis-proven policies aren't implemented to fix the economy, like more high-end tax cuts, bail-outs of the financial industry who created this mess, or more free trade agreements. We're on the path to an Economic Armageddon. Hopefully we won't " stay the course" set by the Bush plutocracy, because that road is leading us right off a cliff.
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