There is so much press these days about the U.S. economy. Corporations (in general) are making good profits and their balance sheets are bulging with record levels of cash. Conversely, employment is way off traditional post-recession highs and not really getting any better.
It’s complicated and one has to wonder how things got to be this way.
This past weekend I read a terrific article I think does a dandy job of connecting the dots of the various circumstances that have converged to where we are today. It was written by Globe and Mail columnist Barrie McKenna and is called For U.S. workers, the lost decade of opportunity.
According to this article, the key triggers, events, conditions that help explain the U.S. economy are:
- Technology: Jobs replaced with technology.
- Skills: Worker skills not keeping pace with technology changes.
- Asia: Many labor intensive jobs lost to India and China.
- Profits: Corporate profits are high but not being re-invested in jobs.
- Wages: Real wages have not grown in 30 years.
- Housing: Low interest rates artificially pumped up home equity wealth.
- Consumption: With no real wage improvements, consumer tapped into home equity to improve standard of living.
- Wealth #1: Housing crash destroys home equity and consumer spending.
- Wealth #2: Mean time, corporate profits continue to rise, so shareholders and senior executives are doing better than ever increasing the gap between the well off and everyone else.
- Recovery: Jobless recovery and low wages converge with low consumer spending.
- Jobs: Over 12 million jobs are required to regain former employment and economic levels.
It’s a sobering scenario and one that not easily solved. The full article is definitely worth the read as it provides examples, details and some startling facts about wealth distribution. I highly recommend reading it.
Thanks for reading my blog and please visit again.
Vincent out.
