The WSWS take on the economic recovery that isn't. [View All]

The WSWS has provided the best analysis I've seen so far of the 7.2% GDP growth (or, as CNN might inform us, the 7.2% GDP growth, the 7.2% GDP growth, the 7.2% GDP growth, the 7.2% GDP growth etc.). Given that we will be hearing for the next three months how the economy has recovered and all is well, it wouldn't hurt to have the facts presented below close at hand for those dark moments when Tim Russert has you convinced Bush's "re-election" is all but assured.

In addition to the problems discussed in the excerpt, the article notes the absence of business pricing power means future increases in profits will likely come from job killing technology rather than increased hires. Also, structural imbalances continue to pose a serious threat to any recovery, real or imagined.

http://www.wsws.org/articles/2003/oct2003/econ-o31.shtml

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In the first place, the increase in consumption spending was not the result of a rise in aggregate income, flowing from increased employment, as would be the case in a “normal” recovery. According to the Economic Policy Institute, “the strength of consumer spending rested on tax cuts and mortgage refinancing” with a one time tax cut boosting disposable income by $100 billion. This meant that after-tax income grew by 7.2 percent. Before-tax income, however, rose by only 1 percent, while real wage and salary income, after taking inflation into account, actually fell by 0.1 percent in the quarter.

The income figures point to the main peculiarity of the present “recovery”—the continued decline in employment. In a comment published on October 24, Morgan Stanley chief economist Stephen Roach noted that “by our calculations, over the first 21 months of this recovery, real wage and salary disbursements—the dominant component of personal income—are running about $320 billion below the path that would have been generated in a normal recovery.”

According to his figures, some 22 months after the recession supposedly ended in November 2001, private sector hiring in the US economy was running 4.3 million workers below the norm of the past six recoveries.

Other figures highlight this process. In a recent comment, New York Times op-ed columnist, Bob Herbert, pointed out that in the past two years the number of Americans living in poverty has increased by three million, while the median household income has fallen for the past two years. According to research by EPI senior economist Jared Bernstein the decline in the number of hours worked by families, rather than by individuals, was “of a magnitude that’s historically been commensurate with double digit unemployment rates.” Not only are fewer family members working, the ones who are employed are working less hours.

lots more...