Paul Krugman, economist and columnist for the
New York Times wrote recently that the lack of consumer demand is a one reason the US faces a protracted recovery. This chart shows where consumer money is going: paying off accumulated debt racked up in 2004-08. Total household borrowing (blue) has gone negative in the last seven quarters. But less consumer borrowing only tells part of the story. The fundamental change in consumer spending that drives a large part of our economy is middle class wealth contraction. Consumer debt has been used to make up for a severe contraction in middle class wealth. The massive shift of national wealth to the rich, not experienced since the 1920s, began under the Reagan administration, but a Democratic president, Bill Clinton presided over the most dramatic transfer. In 1980 the top 1% of Americans received 10% of the national income; by 2007 the richest Americans (above $398,900 per year) increased their share to 23.5% Between 1973 and 2006, the bottom 99%--the trickle ons--received an increase in real income of just 8.5%, while the rich--the tricklers--lavished in a 190% rise in real income. So if some politician tells you that a tax increase just for the rich is unfair, ask him or her to buy you a chateau on the Côte d'Azur and a Ferrari Superamerica III (sunflower yellow, of course) to park in the driveway.
Amid all the bad economic indicators
Forty-four & Folks say the recession officially ended in June, 2009. Back to reality, people--the chart below is sadly self-explanatory.
