the visible hand

it is the theory which decides what can be observed – einstein

4% revised 2nd qtr GDP growth — median incomes below 2000 pre-recession levels

Posted by ecoshift on August 30, 2007

Two articles this morning point up the disconnect between bull markets, economic growth and the well-being of the average US citizen. While revised 2qtr GDP figures show improved growth, the NYT points out that median income levels have not reached levels achieved prior to the last recession–and that the current level of pre credit turmoil growth is unlikely to be sustained through the end of the year.

If strong economic growth and an appreciating housing market failed to bring improvement to median incomes…

U.S. 2nd-qtr growth recovers, jobless claims up
From Reuters
7:22 AM PDT, August 30, 2007

WASHINGTON — The U.S. economy grew at an annual rate of 4 percent in the second quarter, as strong business investment led the fastest pace of expansion since early last year, the government reported today.

The Commerce Department raised its estimate of gross domestic product — the measure of total goods and services output within U.S. borders — from a 3.4 percent gain that it published a month ago. That was in line with Wall Street economists’ forecasts and far outstripped the first quarter’s anemic 0.6 percent rate of expansion.

However, the rebound in growth is not likely to be sustained. Since the April-June quarter, a credit squeeze stemming from rising defaults for sub-prime mortgages has disrupted financial markets worldwide and led policy-makers and analysts to scale back estimates for U.S. economic growth in coming quarters.

Indeed, other government data showed that jobless claims unexpectedly rose last week, with the number of unemployed people still on the benefit rolls after drawing an initial week of aid the highest since mid-April.

“We need to see more data, but there must now be a real suspicion that companies have started to recognize that maintaining earnings growth in the current environment will be difficult with their current staffing levels,” economists at High Frequency Economics wrote in a note to clients.

A Sobering Census Report: Americans’ Meager Income Gains – New York Times
Published: August 29, 2007

The economic party is winding down and most working Americans never even got near the punch bowl.

The Census Bureau reported yesterday that median household income rose 0.7 percent last year — its second annual increase in a row — to $48,201. The share of households living in poverty fell to 12.3 percent from 12.6 percent in 2005. This seems like welcome news, but a deeper look at the belated improvement in these numbers — more than five years after the end of the last recession — underscores how the gains from economic growth have failed to benefit most of the population.

The median household income last year was still about $1,000 less than in 2000, before the onset of the last recession. In 2006, 36.5 million Americans were living in poverty — 5 million more than six years before, when the poverty rate fell to 11.3 percent.

And what is perhaps most disturbing is that it appears this is as good as it’s going to get.


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