Robert Kleinhenz, chief economist for the Los Angeles County Economic Development Corp., says the U.S. unemployment rate could fall to 6% by this time next year. Above, workers sort packages at the FedEx hub at Los Angeles International Airport. (Jae C. Hong, Associated Press / December 2, 2013
On December 16, 2013, Don Lee and Shan Li write in the Los Angeles Times:
After six years of a gloomy recession and shaky recovery, the U.S. economy looks poised to regain its glow next year with stronger job growth, bigger income gains for more people and a resurgence of homeowners moving up into new digs.
Some experts say economic growth could be even stronger next year now that the House has approved the bipartisan two-year budget deal.
The political maneuvering in Washington is directed at benefiting the wealthy capital ownership class, not the average person on “Main Street.” Such policies as are pursued will further concentrate ownership of wealth-creating, income-producing productive capital assets among the 1 to 5 percent of the American population and further enhance the economic and political power of the wealthy ownership class.
All in all, many economists now see economic growth climbing to a solid 3% next year, a significant improvement from the 2% average annual pace that the economy has been stuck on for the last 4 1/2 years.
An acceleration to 3% would probably push up U.S. job growth to 250,000 a month on average, from a monthly average of 190,000 over the last 12 months…
A 3 percent GDP rate of growth is anemic with the wealthy ownership class reaping the economic gains while job growth will remain anemic and limited to low-paying service and production, fast-food, and healthcare jobs. This will not be sufficient to bolster demand and create “customers with money” necessary to stimulate growth. Only the people who already own productive capital are the beneficiaries, as they systematically concentrate more and more capital ownership in their stationary 1 to 5 percent ranks. Yet the 1 to 5 percent are not the people who do the overwhelming consuming. The result is the consumer populous is not able to get the money to buy the products and services produced as a result of increasingly substituting machines for people, which destroy jobs and devalue the worth of labor. And yet you can’t have mass production without mass human consumption. It is the exponential disassociation of production and consumption that is the problem in the United States economy, and the reason that ordinary citizens must gain access to wealth-creating, income-producing productive capital ownership to improve their economic well-being.
Global competition and the increasing role played by computers and other advanced technologies have reduced the need for mid-level workers with no special skills, which has forced some economists to rethink their old assumption that full employment meant no more than 4% or 5% joblessness.
Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.
Unfortunately, ever since the 1946 passage of the Full Employment Act, economists and politicians formulating national economic policy have beguiled us into believing that economic power is democratically distributed if we have full employment––thus the political focus on job creation and redistribution of wealth rather than on full production and broader capital ownership accumulation. This is manifested in the belief that labor work is the ONLY way to participate in production and earn income. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Capital provides not less than 90 to 95 percent of the input. Full employment as the means to distribute income is not achievable. When capital workers (productive capital owners) replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.
Many business executives and analysts remain cautious about the outlook.
One reason is that around this time each of the last four years, many top economists, including those at the Federal Reserve, put out rosy forecasts that the recovery would shift into higher gear.
But no sustained pickup ever materialized as still shell-shocked consumers sat on their hands and businesses on their piles of unspent cash.
Conventional economist, political leaders and the national media including the Los Angeles Times are oblivious to the structural problems that plague our economy, especially with respect to the ways the system further concentrates ownership of wealth-creating, income-producing productive capital assets and growth among the already wealthy ownership class, which represents 1 to 5 percent of the population. With such concentrated economic power, the American majority is barred from participating in the ownership of the non-human factor assets that are doing the bulk of the production of products and services, leaving them with their ONLY income source a job or welfare. Thus they are shut out from a most significant income source to effectively empower them to be “customers with money” and propel economic demand, and thus real growth of the economy.
Perhaps the biggest is that interest rates have risen since summer and are likely to tick higher as the Federal Reserve begins to pull back on its $85 billion in monthly bond purchases, a key stimulus aimed at spurring the economic recovery.
It’s uncertain how investors and financial markets will react as the central bank, with Janet L. Yellen set to be its new chair, tries to wean the economy from years of easy-money policies.
There is no question that the Federal Reserve System needs to be reformed to act as a purveyor of economic growth.
Right now the Federal Reserve creates money by loaning it to banks, who re-loan it multiple times because of fractional banking rules. With Capital Homesteading, money would be created by loaning it directly to citizens via banks at near-zero interest to invest in FUTURE wealth-creating, income-generating (full dividend payout) productive capital assets formed by producer companies. To build real wealth and also phase out our near-defunct social security scheme, the new full-reserve money would go into a long-term retirement account to be invested in dividend-paying, asset-backed shares of corporations. That way, money power would be spread to all citizens. The middle class would be invigorated using the principle of compounding interest, instead of being decimated by mushrooming public and personal debt.
The Federal Reserve could play a more positive role, removing artificial barriers to equal citizen access to acquiring and owning productive capital wealth. By creating asset-backed money for production, supported by growth-oriented tax policies, the Federal Reserve could truly help promote shared prosperity in a market system.
Fed reports show that in the third quarter, U.S. households as a whole had recouped nearly all of the wealth lost during the Great Recession, although that can’t be said of the average household.
Analysts doubt such hefty stock appreciation will continue next year. Wealth is more likely to be generated by home equity gains and thus spread proportionately a little more to middle-class Americans.
Such gains pertain to the wealthy ownership class within the top 1 to 5 percent of the population, who own the vast wealth-creating, income-generating productive capital assets of American corporations. Homes, on the other hand, are intended for personal and family consumption, and do not produce income. Any realized home equity gains in value are defrayed to next home purchases or cashed out for retirement, or inherited.
With more supply coming on line — plus higher mortgage rates and fewer investor purchases — house price appreciation is likely to slow to 4% next year from a projected 11% this year, …
Higher mortgage rates and decreasing “customers with money” who are credit worthy will continue to damper home building.
Still, stronger home building will continue to juice the economic recovery. Increased exports and business investments will help too. And unlike the last two years, the government sector isn’t likely to be a big drag on growth.
The American people will experience far greater competition globally as teams of people and machines compete to produce and sell their products and services. This means that we must look to increasing the productiveness of technological innovation and invention. The system is rigged by the wealthy ownership class to manipulate the lives of people who struggle with declining labor worker earnings and job opportunities, and then accumulate the bulk of the money through monopolized productive capital ownership. Our scientists, engineers, and executive managers who are not owners themselves, except for those in the highest employed positions, are encouraged to work to destroy employment by making the capital “worker” owner more productive. How much employment can be destroyed by substituting machines for people is a measure of their success––always focused on producing at the lowest cost. Only the people who already own productive capital are the beneficiaries of their work, as they systematically concentrate more and more capital ownership in their stationary 1 to 5 percent ranks.
That leaves consumer spending, the single biggest component of the U.S. economy, accounting for about 70% of gross domestic product, or the nation’s total economic output.
Despite the strong rebound in car sales, personal spending on the whole has been mediocre, growing at an annual rate of about 2% in the last three years. But some analysts say next year could be a breakout year for the U.S. consumer.
On one side, households are in better shape to spend. Many have paid down their credit card and other debts over the last few years; their average debt-servicing burden is now as low as it has been in a generation.
The reality is that personal and family household income for those who are dependent on a job as their ONLY income source is declining. Wage and salary incomes will continue to decline simultaneously with global competition and, as a result of the necessity to turn to increasingly more productive non-human means of production, destroy jobs that will become unnecessary and devalue the worth of labor.
Layoffs have fallen to pre-recession levels, and many companies are operating with bare-bone staffs. As sales grow, it won’t be just head counts that rise, said Shawn DuBravac, chief economist for the Consumer Electronics Assn. Employers also will pay more to retain their most productive and profitable workers, he said.
Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. This will not change with companies realizing that they can operate more efficiently with fewer employees. Therefore, unless the employees are owners, the share of corporate profits going to the employees will continue to decline.
On the other side, many U.S. households have put off buying cars, appliances and other big-ticket goods. Young adults have delayed moving out on their own or starting families.
The reality is that more and more people are being squeezed financially, faced with dismal job prospects (their only source of income) and on the blink of having to turn to the government for welfare support funded by tax extraction and national debt. Americans, for the most part, are in a mode of retrenchment even though they have tremendous pent-up demand and unfulfilled dreams for a more affluent life, which they see enjoyed by the wealthy ownership class (without realizing that those people are wealthy because they OWN).
http://www.latimes.com/business/la-fi-economic-outlook-20131216,0,5950056.story#axzz2nf0syjWJ
