Consumption expenditures accelerated to give us a 3.2% growth rate in real GDP for 2010I. Here's the ugly truth - certain parts of the economy don't really need the bottom 10%. Outrageous compensation increases for the upper upper income group and humongous tax cuts during Bush's reign has set up the upper middle class and higher to carry the consumer spending baton.
What does need the bottom 10% is Social Security and government spending in general. Collecting unemployment instead of paying taxes, especially payroll taxes is killing local governments along with Washington D.C. and bringing down Social Security and Medicare.
Meanwhile the higher income groups will pick up real estate on the cheap and sell it at much higher prices at the next go around to those entering the housing market. This will take a while, because it looks like homeowner wanabees will actually have to document a sufficient income this time to afford the house. Assuming of course that we haven't forgotten 2007/2008 by then.
I'd much rather see manufacturing driving economic growth instead of consumption, which implies more debt to me.
ReplyDeleteDon't get me started on executive compensation, and the good old boys club between the boards of directors and the top corporate officers. I could tell you some things about the company I work for......
I probably differ with you on opinions on taxation. No matter how high you set the tax rates, there just aren't enough upper income people to fund all of our social programs. At some point the alcoholic will have to sober up and cut these benefits least we go the way of the PIIGS. I'd trade a repeal of the 16th amendment for a consumption tax, but politicians are less trustworthy than the titans of business.