Friday, April 30, 2010

The Manipulated Anti-MIddle Class 'Recovery'

The latest GDP numbers are out. They show a 3.2% growth in Q1. Examine the numbers in detail and you have to reach the conclusion that this "recovery" is a very manipulated and distorted recovery.

A sizable part of the gains came from strength in economic performance by the Wall Street elite and the health industry, which of course is where the government has been playing and funneling money to its favored groups.

Much of the rest came from inventory adjustments, which as Peter Morici has pointed out, " the arcane world of GDP accounting, ending depletion of inventories adds to growth...Adjustments to inventories accounted for 1.6 percentage points of growth."

Other small pockets of growth included appliance sales where government rebate programs have stimulated sales. But the rebate money allows others to buy new washing machines using money coming from your taxes money (Or Fed money inflation). Home sales were up because of the $8,000 first time home buyers tax credit--more short-term manipulation. The program ends at the end of this month.

Some "recovery."

Morici is spot on when he writes, "This recovery is decidedly anti middle class...Backing out the inventory adjustments, real GDP increased about $162 billion since the second quarter of 2009, when the economy bottomed out. Wall Street for 2009 paid out bonuses of nearly $150 billion on profits twice that amount."

Is it any wonder that the other economic news out today is that the top 1% of Americans increased their share of all national wealth to 35.6% in 2009, up from 34.6% in 2007?

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