GDP Sector Growth is as follows:

- Inventories 94 hundredths of 1% (Cash for Clunkers inventory build)

- Residential Construction: 53 hundredths of 1%

- Federal Spending: 62 hundredth of 1% (Unemployment Programs, etc)

- Motor Vehicles: 1.01% (Cash for Clunkers)

- Miscellaneous: 4 tenths of 1%

What might have been a contraction in the 3rd quarter was reversed by Cash for Clunkers (mostly) and the ARRA. <link> Angry Bear Blog, hat tip to DOLB and kharris. Looks like GDP growth was all government. Anyone still looking to raise Fed Rates?

Long Term Unemployment as shown here: <link> Economists View is at the highest level since WWII with slightly < 2.5% of the population experiencing unemployment >27 weeks

Spencer's Argument on Labor Share:

A far better statistician than I and also an accomplished economist, Spencer at Angry Bear <link> makes a well reasoned argument that Labor has not seen its fair share of productivity increases for the last 20-30 years.

Pre-1973, productivity growth averaged 2.8%. From 1974 to 1995, productivity growth slowed to 1.5% before returning to 2.4% after 1995. Real GDP followed a similar pattern, falling from 68% (ratio prod to real GDP) in the strong productivity era to 50% in the weaker part and returning to 80% after 1995. Real GDP growth equals productivity growth plus hours worked or employment growth. In 2009, a 1% increase in real GDP results in a 2 tenths of 1% increase in hours worked versus 3 tenths of 1% in pre-1974 and a 5 tenths of 1% in the 1974 to 1995 period. <link>

Examining non-farm Productivity versus Output gives a clearer picture. In the 1990s and early 2000 recoveries, productivity growth outpaced Output growth resulting in drops in hours worked, decreased employment or what were called jobless recoveries. <link> It appears the real issue is weaker growth rather than productivity improvements. The result of this change since 1982, labor has experienced a decreasing portion <link> of the productivity gains. The graph represents labor payments as a portion of the total nonfarm business output as reflected in 1992 $.

So what happened to business after tax profits? <link>

Old Topic New Chart; 2001/2003 10 year Impact on Taxpayers

Not much has changed here. ~25% of the 2001/2003 tax breaks were skewed toward 1% of the taxpayers, ~ 1 million taxpayers, in the amount of ~$550 billion. Note also where the $200,000 salary tax breaks were. <link>

This is all good information but what do we do about it? Wage increases for 25 years have more or less tracked inflation, meaning that workers were shut out on productivity gains. That is certainly old news. Of course pump priming (cash for clunkers, etc.) is all government but there are other signs that business is prepared to start expanding. This looks to be following the normal pattern.

As far as the other things go I see deregulation as one of the prime causes for the concentration of wealth. Just letting the Bush tax cuts expire is only a small part of the problem. Too big to fail is a direct result of deregulation and must be reversed as well. The first step to repairing this damage is public financing of federal elections and lobbying reform and nobody is talking about that. Think not, just look at how the insurance companies are driving the debate on health care reform (tea parties included). What is there answer to that; well just raise premiums even more.

We know the problems and have for a long time. The head winds for action are very strong. So what do we do about it?

Dallas:

The calls for higher interest rates to stem inflation are premature when all of the growth has been related to gov stimuli. We are still at the brink. The expansion in business gains are mostly financial which does nothing for labor. The history of Labor's share of Productivity Gains has a longer history than just Boy-George and goes back to Reagan.

Transparency on W$ would certainly cause banks and W$ to act in a credible manner with regard to derivatives, CDO/MBS, CDS, etc. No moves a foot there. The proposed CFPA is a bandaid in comparison to such such a move and was all Brooksley Born was asking for in 1999. A revision to the 2005 Consumer Protection and Bankruptcy Act allowing courts greater freedom in Bankruptcy Cases would open the back door for consumers and companies alike and place a greater burden upon banks to loan responsibly or lose profits. The recent Credit Card Modernization Act did not have a Usury limit in it because of the spectre of the lack of available credit boogy-man. The CRA needs to be modernized to cover all oriniginators and not just Freddie and Fannie (80% of all subprime loans came from originators not covered by the CRA). All tranched CDO/MBS consisting of Mortgages shall have original and registered signed Notes (copy of signature and document) rather than MERS electronic endorsements. <link>

As I said in the attached tax break chart, take note of where the >$200,000 salary starts.

Until everyone begins to understand that the Financial Industry asset appreciation is not going to employ labor, we have a long way to go. And even then Automation will threaten global labor far worse than globalization has threatened US Labor.