If Incomes are Down, Where is the Economic Spending coming from? Industrial Production ? Credit Contraction?

With 8 million jobs lost in this great recession, it is rather surprising to see so many people enter into a deep capture mode of believing in a quick and efficient recovery. If we look at data in the misery index, the average American has a hard time swallowing the jagged economic recovery pill. They look at their paychecks and see no recovery. They look at rising healthcare costs and see no recovery. They send their kids to colleges where costs are going up 8,9, or even 10 percent per year. The data simply does not reflect this actual reality. Are things better than say in March? Depends on what we look at. Sure, the stock market is up a record 60 percent but does your life feel 60 percent better? Is your pay up by 60 percent? What about your bottom line? If we look at disposable income for the average American, it has actually fallen. If it follows that two-thirds of our economy is based on spending, then where is this money coming from?

With over 70 years of data, disposable income has only gone negative on a year over year basis one other time and this was in the late 1940s. This is really not a typical occurrence. Yet when we deconstruct the GDP report and 3.5 percent growth, we realize that this equation:

GDP = private consumption + gross investment + government spending + (exports - imports)

A large part of that growth came from government spending. The other growth came largely because of cash for clunkers with the auto sector contributing 1.6 percent of the 3.5 percent growth (typically about 0.1. or 0.2 percent). In other words, there should be little shock that GDP was up. Why not spend $2 trillion and make it go up by 7 percent? Of course, any thoughtful analysis shows the error in this reasoning. It is an adrenaline shot to the chest administered by the bailout syringe. The U.S. Treasury and Federal Reserve are juicing the markets and hoping this recovery sticks. The latest data relies on purely government back stops. If we look at industrial production, things are still looking like a recession


Views: 20


You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

Latest Activity

cheeki kea favorited Diana's video
5 minutes ago
Boris Badenov commented on James T. Kirk's video
6 minutes ago
cheeki kea favorited the mighty bull's video
9 minutes ago
Boris Badenov favorited BARRY's video
9 minutes ago
cheeki kea favorited the mighty bull's video
9 minutes ago
Diana's video was featured

DSA Queer Socialists' Nude Dancing Unicorn-Man Teaching How Capitalism Suppresses The Queer Impulse

Seeing how democrat socialists like Sen. Bernie Sanders and Alexandria Ocasio-Cortez are media darlings now and being welcomed into the Democrat Party with o...
9 minutes ago
Deep Space commented on cheeki kea's blog post UK school children to be taught 'boys can have periods too'
"Repeat after me. Cum is not menstruation fluid."
10 minutes ago
cheeki kea posted blog posts
19 minutes ago
cheeki kea commented on Deep Space's video


"Gender-benders War on the english language now in progress. Next up - infiltration into primary schools."
26 minutes ago
Boris Badenov posted videos
28 minutes ago
jim's 5 blog posts were featured
33 minutes ago
Ria's video was featured

Former Employee of Bohemian Grove exposes secrets of World Leaders.

Former worker of Bohemian Grove speaks out about the club and its members. Alex Shore, who worked at the Bohemian Grove for 11 years, speaks out about what she learned from working there.
33 minutes ago
skip barker posted discussions
35 minutes ago
cheeki kea favorited Marklar's Ghost's blog post Texas Town Embraces Gender Neutral Restroom Culture - (Satire)
52 minutes ago
cheeki kea commented on Boris Badenov's page @jordanbpeterson - Great Britain continues its descent into the tyranny of the well-meaning
"It's the War on Gender, on-going and getting worse."
55 minutes ago
Deep Space favorited Deep Space's blog post Russia Greenlights Retaliatory Syrian Attacks on Israeli Targets -- Report
57 minutes ago

Please remember this website is supported by your donations...

© 2018   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2015 - all rights reserved. unless otherwise noted