Disturbing reports about the "lost decade" of the 2000's have begun to surface, confirming what millions already knew.
The decade that just past was the first in American history that resulted in zero net job creation and zero income growth.
Every previous decade going back to the 40's exhibited job growth in the ten year period of at least 20%.
Middle income households made less in 2009 then they did in 1999.
The overall net worth of Americans has declined dramatically as well in the last ten years as housing prices have tumbled.
Meanwhile, productivity grew dramatically in the past 10 years.
However, none of this supposed "benefit" was passed on to workers.
In fact much of the productivity gains came from two areas.
One was technology, which enabled less workers to do more.
The second was layoffs due to the first area.
Employers cut payrolls, often permanently, and slashed costs, driving up their productivity statistics while lowering overall employment.
This trend continues today as we reach high productivity numbers while the unemployment rate stands at 10.
0%.
This begs the question where does the American economy go from here? The answer is very cloudy.
We reached a saturation level in America for consumer spending approximately 15 years ago.
This also marks the rapid expansion of consumer credit to continue to finance increased growth and spending.
Clearly, this strategy was unsustainable.
Relying on the consumer as the main driver of US economic growth while simultaneously cutting incomes, jobs and job security naturally resulted in the mess we live in today.
The problem is, Americans no longer "create" much of anything.
A good chunk of our manufacturing base was outsourced to lower cost providers in the last 25 years.
A service economy, based around two tiers of service.
One are high paying technology, professional and medical services.
The second is everything else from restaurant worker to call center employees.
We may create high level ideas and technology in America, but the actual production of this technology takes place elsewhere.
As soon as any manufacturing company reaches a certain size in the US, the pressure to send it overseas mounts as the costs of paying American labor continue to skyrocket.
Even when figuring the costs of global shipping, it usually cheaper to outsource.
It is not really a matter of a lack of faith in the American people, but more a function of what is there left to buy that the American economy makes? Consumers have long since surpassed a time when they "need" anything.
The rest of the world needs very little of what we make.
The only thing the rest of the world needs that we create is rampant consumption fuel led by debt.
Outside of airplanes, raw food materials and a handful of other items, America runs an enormous trade deficit each and every month.
We can only export so many "services".
Meanwhile, the rest of the world becomes more proficient at the high level services our country provides every day.
What this leaves us with is a vague, prideful idea of "American ingenuity" and our "entrepreneurial drive".
While I would never discount these traits, such ideas have to be rooted in reality of what it is of value that we as a nation are offering.
It seems that so far we allowed greed and wishful thinking to obscure the truth about what the real driver of future American growth will be.
The consumer is only part of the answer.
Only now is a sober assessment of the long term outlook being undertaken.
We as a nation need to meet this problem head on, and find a path to true sustainable growth, not a blind alley of financial smoke and mirrors fueled by out of control spending.
Part II will discuss some ideas about sustainable ways to move forward.
The decade that just past was the first in American history that resulted in zero net job creation and zero income growth.
Every previous decade going back to the 40's exhibited job growth in the ten year period of at least 20%.
Middle income households made less in 2009 then they did in 1999.
The overall net worth of Americans has declined dramatically as well in the last ten years as housing prices have tumbled.
Meanwhile, productivity grew dramatically in the past 10 years.
However, none of this supposed "benefit" was passed on to workers.
In fact much of the productivity gains came from two areas.
One was technology, which enabled less workers to do more.
The second was layoffs due to the first area.
Employers cut payrolls, often permanently, and slashed costs, driving up their productivity statistics while lowering overall employment.
This trend continues today as we reach high productivity numbers while the unemployment rate stands at 10.
0%.
This begs the question where does the American economy go from here? The answer is very cloudy.
We reached a saturation level in America for consumer spending approximately 15 years ago.
This also marks the rapid expansion of consumer credit to continue to finance increased growth and spending.
Clearly, this strategy was unsustainable.
Relying on the consumer as the main driver of US economic growth while simultaneously cutting incomes, jobs and job security naturally resulted in the mess we live in today.
The problem is, Americans no longer "create" much of anything.
A good chunk of our manufacturing base was outsourced to lower cost providers in the last 25 years.
A service economy, based around two tiers of service.
One are high paying technology, professional and medical services.
The second is everything else from restaurant worker to call center employees.
We may create high level ideas and technology in America, but the actual production of this technology takes place elsewhere.
As soon as any manufacturing company reaches a certain size in the US, the pressure to send it overseas mounts as the costs of paying American labor continue to skyrocket.
Even when figuring the costs of global shipping, it usually cheaper to outsource.
It is not really a matter of a lack of faith in the American people, but more a function of what is there left to buy that the American economy makes? Consumers have long since surpassed a time when they "need" anything.
The rest of the world needs very little of what we make.
The only thing the rest of the world needs that we create is rampant consumption fuel led by debt.
Outside of airplanes, raw food materials and a handful of other items, America runs an enormous trade deficit each and every month.
We can only export so many "services".
Meanwhile, the rest of the world becomes more proficient at the high level services our country provides every day.
What this leaves us with is a vague, prideful idea of "American ingenuity" and our "entrepreneurial drive".
While I would never discount these traits, such ideas have to be rooted in reality of what it is of value that we as a nation are offering.
It seems that so far we allowed greed and wishful thinking to obscure the truth about what the real driver of future American growth will be.
The consumer is only part of the answer.
Only now is a sober assessment of the long term outlook being undertaken.
We as a nation need to meet this problem head on, and find a path to true sustainable growth, not a blind alley of financial smoke and mirrors fueled by out of control spending.
Part II will discuss some ideas about sustainable ways to move forward.
Source...