The economy is based on borrowing
Read the entire story at: http://seattlepi.nwsource.com/printer2/index.asp?ploc=b&refer=http://seattlepi.nwsource.com/opinion/218451_trahant03.html
Summary: The news about the economy sounded pretty good last week.
The government reported the economy is on a roll again.
The Commerce Department says there's a sharp pickup in the creation of jobs and we are earning more for our work.
This is good news to some people because it's proof that the Bush tax cuts are working.
But there are lots of ways to interpret these facts.
The numbers I've been reading scare me.
Start with Thursday's good-news report from the Commerce Department.
Yes, there are more jobs and income is up.
Other data on Friday show that job creation is slower than expected.
But working or not, Americans continue to spend more than we earn.
Our income levels rose 0.3 percent while consumer spending climbed 0.5 percent.
This teeny two-tenths difference is yet another reminder that America -- our government, our companies and our people -- is fueling the economy with debt.
These numbers reflect only a snapshot, not a trend.
They don't tell us about the state of work in the United States.
The Economic Policy Institute recently compiled its "State of Working America 2004/2005" report.
"Despite being two and a half years into an economic recovery, many of the problems that beset working Americans in the 2001 recession and protracted jobless recovery persist today," says the opening paragraph of the report.
"The 2001 downturn stopped and even reversed most of the positive economic trends that characterized the latter 1990s."
One reversed trend is the end of a shared American prosperity.
The country's wealth scale is out of balance.
"Using newly available income data that goes all the way back to 1913, income in 2000 was only slightly less concentrated among the top 1 percent of households than during the run-up to the Great Depression, which was the worst period of uneven income concentration in the last century," the report says.
Where you see the effects is in the shrinking paycheck of median household income.
Health insurance has declined for all wage groups -- and pension coverage is shrinking, too, down from more than half of all workers in 1979 to about 45 percent in 2002.
Last week, a mortgage association reported that 36.6 percent of mortgages are based on adjustable rates.
"From 1979 to 2000, the wage of the median chief executive officer grew 79 percent, and average compensation grew 342 percent."
The newspaper collected data from the 100 largest companies that showed median compensation from pay, stock grants and other incentives was $14 million in 2004, up 25 percent from the year before.
Summarized by Copernic Summarizer
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