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    Poverty Report Contradicts GDP Claims

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    It’s amazing how the government manages to continue selling the Brooklyn Bridge over and over again to a gullible public. Americans buy wars they don’t need and economic recoveries that don’t exist.

    ATLANTA, October 3 (RIA Novosti) It’s amazing how the government manages to continue selling the Brooklyn Bridge over and over again to a gullible public.  Americans buy wars they don’t need and economic recoveries that don’t exist. 

    The best investment in America is a highly leveraged fund that invests only in large-cap companies that are buying back their own stocks.  Many of the firms repurchasing their stocks are borrowing in order to push up their stock prices, issue executive “performance bonuses,” and boost shareholders’ capital gains. The debt they incur will have to be serviced by future earnings.  This certainly isn’t a case of capitalism driving the economy via investment.

    Consumer spending isn’t driving the economy either. The US Census Bureau’s 2013 Income and Poverty Report concludes that in 2013, real median household income was 8 percent below the amount reported in 2007, the year prior to the 2008 recession; in fact, it has declined to the level it was at in 1994, two decades ago! Even though real household income has not returned to its pre-recession level and has declined to the level it was at 20 years ago, the government and the financial press claim that the economy has been in recovery since June 2009.

    Another thing that isn’t driving the economy is an increase in consumer debt. The only growth in personal debt is in student loans.

    Real retail sales (corrected with a non-rigged measure of inflation) remain at the level they reached when the recession hit its bottom in 2009. Macy’s, J.C. Penny’s, and Sears store closings are further evidence of the lack of retail sales growth, as is the fact that two of the three dollar store chains are in trouble. Walmart’s sales are declining.

    The basis of the auto sales hype is subprime lending and leases taken by those who cannot qualify for a loan to purchase.

    Housing starts remain far below their pre-recession level, which is not surprising when the available jobs are part-time with no benefits.  Such jobs cannot support the creation of households and the purchase of homes.

    Where does the government’s second quarter 2014 real GDP growth rate of 4.6 percent come from? It comes from an understated inflation measure and jiggled numbers.  It is not a correct figure. Nothing has occurred in the economy alter it so that a first quarter decline of more than 2 percent could be followed by second quarter growth of 4.6 percent.

    The 4.6 percent number has been pulled out of a hat to set the stage for the November election.

    It is extraordinary that economists and the financial media permit the government to get away with its false economic reporting. Of course Wall Street likes good news… but fake news that misleads investors and covers up economic policy mistakes? 

    Clearly, something is wrong with this reporting. It is not possible to have real GDP growth when real median family incomes are declining and business investment consists of corporations buying back their own shares. Either the government’s GDP estimate is incorrect or the Census Bureau’s Income and Poverty report is incorrect. Apparently, Washington doesn’t understand that if it is going to rig the numbers, it must rig all the numbers.

    The rigged inflation measures create illusionary real GDP growth. They also block cost-of-living adjustments to Social Security pensions. Indeed, the main purpose of the rigged inflation measures has been to get rid of “socialist” Social Security by allowing inflation to gradually erode the real values of “entitlements.” Republicans always want to cut “entitlements” that people have paid for over their working lifetimes via a payroll tax. However, Republicans never want to cut the payroll tax itself. They need the revenues in order to bail out the big banks and to bankroll the never-ending wars.

    Washington has been conducting needless wars abroad for 93 percent of the 21st century, at a cost of trillions of dollars.  More trillions have been wasted bailing out banks that deregulation permitted to become “too big to fail.”  During the past seven years, millions of Americans have lost their jobs and their homes, and the number of families receiving food stamps is at a record high.  These hurting Americans have been ignored by policy-makers in Washington.

    Clearly, the government in America is focused on something other than promoting a healthy economy and the well-being of its citizens. We call it democracy, but it’s not.

    The views expressed in this article are solely those of the author and do not reflect the official position of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

    Tags:
    Paul Craig Roberts, economy, poverty