U.S. Economy Stalls, as Only Elites See Income Gains

Tommy Kalikas
The Associated Press
Newport Beach, CA

The U.S. economy hit stall speed as growth shriveled to just 0.7 percent in the fourth quarter of 2015, with strong personal income growth concentrated in a small number of elite American communities.

The Commerce Department’s Bureau of Economic Analysis reported that U.S. growth has slid from 3.9 percent in the June quarter, to 2.0 percent in the September quarter, and a barely positive 0.7 percent in the last three months of 2015.

The bright spot for the quarter was continued employment gains that resulted in personal income increasing by 3.3 percent. Inflation, low at .01 percent for the quarter, allowed after-tax disposable personal to income increase at a ripping 3.2 percent.

Led by the biggest gain in consumer spending in a decade, the U.S. gross domestic product grew by 2.4 percent for a second straight year. The economy suffered a rough patch at the start in 2015 due to cold winter weather and a strike that shut down 29 West Coast ports. But growth rebounded in the second and third quarter, before slowing at year end.

The key theme of the latest economic report appears to be the stark contrast between the rising fortunes of American households and falling confidence of the business sector. As a result of the loss of trade competitiveness due to the strong dollar and the continuing downturn in energy development and production, businesses slashed inventories and capital investment in the fourth quarter.

Reports of strong employment gains, rising wage power and collapsing inflation would normally be expected to pave the way for a consumer spending boom. But over the first five years of the Obama Administration, after-tax personal income was flat. That performance was the worst term of any President since the Great Depression.

The impact on households was even more devastating during the period. According to a new study from Georgetown University economist Robert Shapiro, aggregate median household income grew steadily from $49,063 in 1979 to $56,177 at the end of the 2002-07 expansion. But from 2008 to 2013, household income plummeted to $51,816 in 2013. That means that the average U.S. household was earning just $2,753 more in 2013 than in 1979, a 5.6 percent gain in 34 years.

Breitbart News reported that although the U.S. economy overall has returned over the last two years to a more normalized 3.0 percent personal income growth rate, almost all the gains are being concentrated in a small number of communities.

According to the National Association of Counties, only 7 percent of the 3,069 counties in America have fully recovered to their 2007 pre-recession levels in the four major sectors of economic activity–total employment, unemployment rate, size of the economy and home values.

With elites in communities around Silicon Valley, Washington DC and New York making fabulous personal income gains, the other 93 percent of America is still stuck in what seems like seven years of continuing recession.

As a result, the U.S. personal savings rate for December ticked up to 5.4 percent, as the vast majority of American consumers are cutting back consumption due to concerns about their own economic futures.