According to a new report by the Economic Policy Institute (EPI), the current economic expansion is the worst of all since and including the recovery of 1949. Robert Scott, the author of the report, blames government reduction of expenditures during this recovery for the weakness of it. You can see from the graph below that this recovery in Gross Domestic Product (GNP) is the lowest of the last 11 recoveries. No doubt government spending plays a role in how fast GNP grows, along with other variables, such as wage and job growth. This recovery is the worst on record for government expenditures. But there is another likely culprit that plays a role in making this the weakest of economic expansions.
You will notice above that all of the economic recoveries since 1949 and through 1990 grew at rates of 4 percent and higher. The recovery under President Ronald Reagan was the last to top 4 percent GNP growth. Under President Bill Clinton GNP growth averaged 3.4 percent, under President George W. Bush it was 2.8 percent, and under President Obama GNP growth is 2.1 percent. Notice growth was less under Bush than under Clinton despite higher government spending. So what else could be going on? Look at the graph below.
Income inequality has grown since and during the presidency of Ronald Reagan, and almost every year since has seen increasing income and wealth inequality. As inequality has grown, the demand for goods and services has been reduced by income stagnation or reduction.
Since and including the 1980s, credit has been expanded in the form of credit cards, home equity credit lines, and home equity growth. In other words, much of the current expansion, weak as it is, is spurred on by credit for the 99 percent, with profits and other enrichment going to the 1 percent, who stole 99 percent of all income growth from 2009 to 2014, along with most of the income produced in the USA during 2016. The 1 percent has gone from stealing about 8 percent of all the income produced in the United States to roughly 37 percent, leaving us with less money to demand goods and services, along with historically slow job growth, wage stagnation, and lost opportunities.
Now the rich want more, and a weaker economy, weaker job growth, reduced real incomes, are the price we’ll have to pay for the Trans Pacific Partnership (TPP), should it pass through congress. Wall Street President Obama has already signed it. Wall Street Democratic Presidential Candidate Hillary Clinton has voiced her support for and against it. No doubt Clintonis is really for it, since her vice presidential choice Tim Kaine is for it, as is her newly appointed head of her transition team Ken Salazar. See What the Corporate Propaganda Network Doesn’t Want You to Know: One of the Many Ways the Trans Pacific Partnership Will Destroy US Jobs and Redistribute Massive Income and Wealth From the 99 to the 1 Percent–JohnHively.Wordpress.com