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Posts Tagged ‘growth’

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.

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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.

income inequality

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

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From the Economic Policy Institute:

“Wage trends greatly determine how fast incomes at the middle and bottom grow, as well as the overall path of income inequality, as we argued in Raising America’s Pay. This is for the simple reason that most households, including those with low incomes, rely on labor earnings for the vast majority of their income. That is why my initial look at the data from the newly released Census Bureau report on income and, poverty in 2013 will look at wages and the incomes of working age households.

The Census data show that from 2012 to 2013, median household income for non-elderly households (those with a head of household younger than 65 years old) increased 0.4 percent from $58,186 to $58,448. However, that modest growth barely begins to offset the losses incurred during the Great Recession or the losses that prevailed in the prior business cycle from 2000 to 2007. Between 2007 and 2013, median household income for non-elderly households dropped from $63,527 to $58,448, a decline of $5,079, or 8.0 percent. Furthermore, the disappointing trends of the Great Recession and its aftermath come on the heels of the weak labor market from 2000-2007, where the median income of non-elderly households fell significantly, from $65,785 to $63,527, the first time in the post-war period that incomes failed to grow over a business cycle. Altogether, from 2000 to 2013, median income for non-elderly households fell from $65,785 to $58,448, a decline of $7,337, or 11.2 percent.”

So the question is: why has average US family income dropped from $65,785 in 2000 to $63,527 in 2007 and then to $58,448 in 2013?

The answer is simple. The money has been redistributed from the 99 to the 1 percent, which is why the stock markets and corporate earnings are at record levels and family income has plummeted for fourteen years, and now remains static and historically low.

Free trade treaties, for example, have shipped jobs overseas, and the difference between the old higher US wages and benefits and the new lower overseas wages and benefits has gone directly from the 99 percent and into the pockets of the 1 percent thanks to politicians such as Wall Street Senator Ron Wyden. Nearly two million US jobs were exported from the US in 2013, according to the Federal Reserve. Around thirty million have been exported since 1990. Thank you Senator Wyden.

Corporations have also pushed the income of their employees down, except of course, for CEO’s and important members of the major Wall Street investment banks. Many of these Wall Street people earn millions of dollars by illegally ripping off the retirement accounts of working Americans. US politicians make certain they’re able to do it. See the book Flash Boys by Michael Lewis.

There are a myriad of other ways the government acts as a legislative conduit to redistribute income from the 99 to the 1 percent. This has been ongoing since 1981.

Essentially, this means that the current massive income and wealth inequality we experience today is a function of tax cuts for the rich, which were then used to corrupt government at all levels, as well as both political parties.

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The Federal Reserve can make or break the economy. Currently, the Fed is keeping interest rates low, which it easier for people to purchase things on credit, spurring demand for goods and services and creating jobs in the process. Republicans have wanted the Fed to raise interest rates for years, but only since President Obama was elected in 2008, in order to tank the economy and place the blame on President Obama.

Click the link below to check out a story by Josh Bivens of the Economic Policy Institute on what other steps the Fed can take to make or break the economy.

How the Federal Reserve Can Help or Hurt the Economy: What’s at Stake | Economic Policy Institute.

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A new study by the Wall Street rating agency called Standard and Poor’s reveals what many already know. High income inequality suppresses the demand for goods and services, depressing GNP growth, and leading to more severe economic crashes than would otherwise be the case.

Here’s what the report won’t tell you. The rich invest their money in the political markets and in other investment areas such as stocks and bonds.

The money going into the political markets is used to convince politicians to pass legislation that redistributes income and wealth from the 99 to the 1 percent, such as free trade treaties. In other words, government corruption is far greater during times of inequality, and also because of it.

The investment money that goes into corporate stocks push up the value of those assets. It’s just a bidding process. So when more people purchase shares of any corporations than those who are selling their shares, the value of those shares go up. The same thing is true of bonds. None of these purchases add to GNP growth, and all of these purchases can result in redistributing income from the 99 to the 1 percent.

When corporate shares head down in value, CEO’s typically cut jobs or employee compensation, or ship jobs overseas to lower wage nations, which pushes profits higher, resulting in rising share and bond prices. The result is nothing more than income redistribution.

And so when inequality rises, it snowballs via the methods above, until such time as somebody decides such inequality is a bad thing. That only happens during the most severe economic crisis’s, such as during the Great Depression when there’s less money to go around to corrupt government.

Check out the story by clicking on the link below.

Wall Street Analysts Research: High Inequality Makes US Vulnerable to Crashes–Billmoyers.com

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The Guardian of the UK, normally a straight forward and honest broker of news and commentary, has bought into the lying bull shit of the US corporate press. Some Guardian idiot named Larry Elliot wrote,

“America’s growth figures have come as a nasty shock to Wall Street. For nine months the stock market had been rising on hopes that the world’s biggest economy was on the mend. But the latest data suggests the US recovery is still very much work in progress.”

No, no, no, the stock market was rising because corporate profits are at record levels! Apparently, Elliot doesn’t seem to understand the connection (simple cause and effect) between stock prices and corporate earnings. He’s too dense to understand that the only way those earnings can grow in the face of worldwide declining demand is by redistributing income from the 99 to the 1 percent. Shipping jobs overseas is the easy way to push stock prices up because the difference between the old wages here and the new lower wages overseas increases corporate profits year after year. Studies by the Federal Reserve show that between 1.2 to 2.4 million jobs are shipped from the US to elsewhere every year.

It’s easy to predict slower growth in the US because the demand for goods and services has been redistributed into the fat wallets of the super wealthy. They’ve used their control of the US government to pass legislation that does this. They now take home over 31 percent of total income produced in the US, compared to about 8 percent thirty-three years ago. That leaves the rest of us with little or no money to buy goods and services to the point where economic growth can be vibrant, like it used to be. Meanwhile, the rich invest in things like politicians and derivatives, which does nothing to create demand, but does everything to destroy it. The redistribution process is growing. That means the economy will continuously weaken, although it is possible there might be occasional and abnormal historically weak growth spurts.

At least Elliot did get something right, although not completely:

“The even worse news is that the US economy may slow down in the second quarter. Not only will activity be impeded – perhaps severely – by cuts in federal programs, but consumers are unlikely to continue running down their savings to finance their spending in the way they did in the first three months of the year.”

What he doesn’t say is that consumers are unlikely to continue running down their savings” or use their credit cards when their income is continuously being redistributed to the 1 percent by their government. (more…)

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A robust jobs recovery remains out of reach. The March jobs report released by the Bureau of Labor Statistics last showed job growth of 88,000 in March—far lower than the 2012 average increase of 183,000.

“This morning’s jobs report was a big, negative surprise and underscored that a robust jobs recovery, even now, has not yet solidified,” said EPI economist Heidi Shierholz. At 168,000 per month, the average growth rate of the first quarter is not even close to adequate; at that rate, we would not return to the prerecession unemployment rate until late 2019. Additionally, although the unemployment rate ticked down to 7.6 percent in March, the decline is due to people dropping out of the labor force. In fact, the labor force participation rate dropped to its lowest point of the downturn, 63.3 percent.

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The US economy slowed again during the second quarter of the year, government figures showed Friday.

The nation’s gross domestic product (GDP) – the broadest measure of the economy – grew at a sluggish 1.5% between April and June, the US commerce department said. The latest figure compares to 2% growth during the prior three months, and 4.1% in the fourth quarter of 2011.

The slowdown came as consumers cut back, local governments cut spending, factories received fewer orders and exports were hit by a global slowdown and a stronger dollar. This has occurred due, in part, to a reduction of US deficit spending engineered by the Republicans to make President Obama look stupid and less electable in November.

The Republicans created a public relations campaign to sow fear of deficit spending in the minds of the American public. The public bought it; so did Obama. So the president reduced deficit spending during a time of negative demand for goods and services and in spite of warnings by some of the world’s brightest economic minds, none of whom serve in the president’s administration. That tells you all you need to know.

US growth slows as consumers cut back on spending–The Guardian of the UK

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Mexicans are no longer trying to flee to the United States from their corrupt nation. Perhaps many have discovered they’re escaping to another nation corrupted by big money. The best stats available indicate a zero net migration into the United States during the last four years. The reasons cited include a declining birth rate, stepped up US border enforcement and a poor job market in the USA.

Click below for the full story

Net Migration From Mexico Dips to Zero

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200,000 US jobs appeared in December, marking the sixth month in a row of gains, and dashing the hopes of Republicans and ruining their “keep the economy destroyed” reelection plans .

The rise in jobs was much more than expected. Analysts had forecast an increase of about 150,000 jobs. Republicans had hoped for a decline of one million or more, thereby increasing their presidential reelection chances. The folks at the Fox Fake News Network were probably horrified to learn the unemployment rate dropped to 8.5%, which was the lowest level in nearly three years, from a revised 8.7% in November, the Labor Department said.

Large job gains were seen in retail, manufacturing, transportation and warehousing and healthcare.

For 2011 as a whole, some 1.6 million jobs were created, which was the highest since 2006. That number historically sucks. Back in the President Jimmy Carter era, it was normal for three million jobs a year to be created, and with rising wage rates. That was with an economy two-thirds the size and two-thirds population of the current one. Nowadays, any inkling of mediocre economic news is hailed as wonderful by the Democrats, and as a total disaster for Republican Party hopes and dreams.

Republicans should be ashamed of the news since there was negative job growth under the Bush administration, something predicted by me in my book, The Rigged Game. Republican economic policies are a disaster for working people. On the other hand, the Democrats aren’t much better for working people since their also corporate drones for the most part.

Employment in the private sector rose by 212,000 in December and by 1.9 million over the year.

Government employment was little changed in December but was down by 280,000 over the year.

The unemployment rate had remained stubbornly high at about 9% for several years, peaking at 10.1% in October 2009. But December marked the fourth month in a row that it had fallen, after routine updates were made to previous months’ data at the end of the year.

However, November’s figure was revised up slightly from 8.6% to 8.7%.
‘Showboating’

The euro, which has fallen sharply against the dollar in recent days, continued its decline after the better-than-expected jobs report.

Marcus Bullus, trading director at MB Capital, said the data would “cheer everyone bar Republican spin doctors”.

“The Obama administration could be forgiven for showboating over this convincing evidence that America’s economy is pulling away from Europe’s,” he said.

But he added: “From a market perspective, strong US data like this will add to optimism, but nobody doubts the considerable downward pressure the eurozone will continue to place on the global marketplace during 2012.”

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