Peter Morici suggests a way to look at economic recovery:
This recovery is decidedly anti middle class. Wages will not keep up with rising prices, health care premiums and taxes. A good deal of the gains, so far, are going to Wall Street and the medical and intellectual property industries.
At 5.6 percent, fourth quarter GDP growth was pumped up by a slower place of inventory draw down–in the arcane world of GDP accounting a slower pace of depletion adds to growth. Although the inventory rebuild has begun, the pace is slow reflecting tepid sustainable demand for U.S. goods and services.
Adjustments to inventories accounted for 3.8 percentage points of growth. Demand for U.S.-made goods and services–the key to sustainable growth—added only 1.8 percent to growth. Domestic demand–less a bump in net exports that is not likely to be sustained—added only 1.5 percent.
Backing out the inventory adjustments, real GDP increased about $150 billion the second half of 2009 after bottoming in the second quarter—just about the amount paid out on Wall Street for 2009 bonuses.
What are the implications for most of us? By age cohort? By income levels?