Robert Reich: Economic Prediction for 2011: Profits for Wall St, More Pain for Main St

[marmar]

via commondreams:



Published on Thursday, December 30, 2010 by RobertReich.org
Economic Prediction for 2011: Profits for Wall St, More Pain for Main St

by Robert Reich


What will happen to the US economy in 2011? If you're referring to profits of big corporations and Wall Street, next year is likely to be a good one. But if you're referring to average American workers, far from good.

The two American economies - the Big Money economy and the Average Working Family economy - will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.

The big disconnect between corporate profits and jobs is likely to continue because America's big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.

In a typical recovery, profits lead to more hiring. That's because in a typical recovery, American consumers head back to the malls - and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers' margins. In short, profits aren't coming from American consumers - and profits won't be coming from American consumers in 2011.

Most Americans don't have the dough. They're still deep in debt, can't borrow against their homes, and have to start saving for retirement. .............(more)

The complete piece is at: http://www.commondreams.org/view/2010/12/30-6

[OHdem10]

1. The profits being reflected on Wall Street are primarily from

American Companies with businesses overseas.

[marmar]

2. Yep.

nt

[Kat45]

3. If Americans are demanding bargain-basement prices, it's because

many don't have jobs, and those that do have low wages. In other words, bargain-basement prices are the only prices they can afford!

[neverforget]

4. same as the last 30 years: rich get richer while the poor and middle class

get poorer.