everywhere you look nowadays (if by "everywhere," we mean "the media"), the cw ("conventional wisdom,"
not "country western") is that the economy is not only getting better, but is going gangbusters.
witness the recent rise in the stock market, which makes everybody who still had money to invest happy.
forbes.com, which is written by people whose median annual salary is about a quadrillion dollars, says that recent sales numbers for the christmas season suggest that americans are returning to luxury.
an upturn in the luxury goods market may be one of the reasons why wal-mart didn't have a blockbuster season. "it has really been the christmas of the one special gift," said michael borwn, a principal with retail consulting firm kurt salmon associates. the fim forecasts an overall gain of 3/5% this season. instead of buying a bunch of smaller presents or discount appliances, shoppers seem to have opted for the big-ticet gift that the receiver might never have purchased otherwise.
oh yeah, that makes a lot of sense. mom didn't want to spend her hard-earned money from that second job at nights to buy toys for all her children at wal-mart this year; she opted for a single gilded champagne flute set from nordstroms, that'll make the kiddies happy! nothing says lovin' like decadent luxury items from an upscale store.
too bad nobody told the consumers how much they loved luxury. cnnmoney reports that consumer confidence fell in december, quite the opposite of what all the experts (read, "people with jobs") expected to happen.
the conference board, a business research group based in new york, said its closely watched index of consumer confidence fell to 91.3 from a revised 92.5 in november.
economists, on average, expected the confidence index, based on a survey of 5,000 households, to rise to 91.8 from the originally reported 91.7, according to briefing.com.
and leave it to those damned commie hippies at
the sfchron to throw even more cold water on the festivities. sam zuckerman, the chron economics writer, posits that this year
across the nation and across the region, it was a tale of two economies in 2003.
for corporate america, the year brought rising sales, rising profits and rising stock prices. as a result, the u.s. economy finally broke out of the cycle of recession and slow growth that had held it in check for three years.
but for workers, particularly those in the hard-hit bay area, it was a year of struggling to find a job, worrying about keeping one or coping with a workplace shaken by layoffs.
mr. zuckerman points out that things looked really hunky-dory to the guys at the top:
the three months ending in september was one of the strongest growth quarters in decades, as the nation's output of goods and services rocketed ahead at an 8.2 percent annual rate.
labor productivity -- a key measure of the efficiency of american industry -- soared at a phenomenal 9.4 percent rate. corporate profits before taxes jumped 16.4 percent compared with the third quarter of 2002.
but while profits went up, jobs creation (the supposed benefit of a
wol's tax cuts) lagged far behind.
while output soared, hiring was notably subdued. from august through november, payrolls grew at a pace of about 82,000 per month, about half the growth rate needed to trim the jobless rate in a sustained fashion...
it was rare for the economy to create so few jobs so far into a period of growth. two years have passed since the economy pulled out of recession. during a comparable period following the downturn of the early 1990s, payrolls were increasing by more than 200,000 jobs per month.
so, unfortunately, for those of us who are making the economy work, there are two choices: you either don't have a job, or if you do, you're working harder than ever before to make up for your buddy who got fired two years ago.
businesses have pared their staffs to the bone, forcing remaining employees to work harder. as sales pick up, employers have been slow to hire, which further adds to work loads.
in other words, it's not just that higher productivity means less hiring. it's also that less hiring means more work per person. and more output per person is the definition of higher productivity.
paul krugman puts it succinctly in the
nytimes:
so if jobs are scarce and wages are flat, who's benefiting from the economy's expansion? the direct gains are going largely to corporate profits, which rose at an annual rate of more than 40 percent in the third quarter...
the bottom line, then, is that for most americans, current economic growth is a form of reality tv, something interesting that is, however, happening to other people. this may change if serious job creation ever kicks in, but it hasn't so far.
the big question is whether a recovery that does so little for most americans can really be sustained. can an economy thrive on sales of luxury goods alone? we may soon find out.
cross-postd at my own blog.
