Which of the three pillars of the economy — consumers, government or business — is thriving?
Floyd Norris has THE ANSWER to the question above:
The economic recovery from the recession that officially ended in 2009 has been extremely disappointing for American consumers. But for business, it has been the best recovery in decades…
The government’s estimate of first-quarter gross domestic product last week indicated the overall economy was only 8.3 percent higher than it was in the second quarter of 2009, the quarter the recession ended. That is significantly weaker than the recoveries that followed the recessions that ended in 1982, 1991 or 2001.
After this much time, the economy had grown at least 11.4 percent (after the 2001 downturn) and as much as 21.3 percent (following the 1982 low).
That subpar performance can be traced to two of the three pillars of the American economy — consumers and the government. But the third, business, has made an impressive bounceback.
Corporations as a group are doing well. Corporate profits, as a percent of G.D.P., rose to record post-World War II levels in 2012, and the effective income tax rate on those profits remains lower than it was in any of the past recoveries, according to government estimates.
The government sector has been shrinking almost continually since the end of the recession. The decline in state and local government seems to have begun to slow down, but the decline in federal spending appears to be picking up and is likely to continue to be a drag on the American economy.
Hmmm. Lots to chew on there, right?
The conservative noise machine tells us that President Obama is bad for business — but the business sector is thriving.
Republicans tell us that the business sector is overtaxed — but Floyd Norris notes that the effective income tax rate on corporate profits remains lower than it was in any of the past recoveries.
Republicans tell us that government spending is out of control and is hurting the economy — but Norris says exactly the opposite is the case. Government spending has been shrinking over the past four years, thereby creating “a drag on the American economy.”