According to revised statistics, the US economy grew at a faster rate than first expected, up to 2.5%. Earlier growth in Q3 2010 was estimated at 2%. But the entire problem with looking at this topline number is reflected in these three paragraphs:
But the most recent increase in GDP still isn’t strong enough to make a dent in the country’s high unemployment rate, stuck at 9.6% in recent months. Analysts say GDP growth of at least 3% is needed to bring down the jobless figure, but many don’t expect the economy to perform that well in the fourth quarter or early next year.
The Federal Reserve’s latest economic outlook, to be released later Tuesday, is likely to reflect concerns among policymakers that unemployment will remain very high in the U.S. for the foreseeable future.
American corporations, on the other hand, have rebounded robustly from the recession. Tuesday’s report showed corporate profits jumped 28% in the third quarter from a year earlier, to an annualized total of $1.66 trillion. That’s a record high and reflects deep cost-cutting in the past and increases in demand for goods and services.
That’s right. Despite record unemployment, and no hope for reductions clearly in sight, corporations have experienced all-time record profits, the highest since the Commerce Department started tracking the figure 60 years ago. They’ve learned to produce as many or more goods without workers.
This is something of a dream for corporate America – bigger profits without those meddling workers to pay. This is the seventh straight quarter of corporate profit growth, with none of those benefits being shared with the working class. “Uncertainty” is blamed for the lack of job growth, but corporations are sitting on giant mounds of cash while they bask in the glow of their strategy to increase their profit margins by cost-cutting.
The other part of this is that multinational corporations are reaping profits from increased consumer spending in China and India. Their markets there have expanded greatly in the past few years.
In the other side of the funhouse mirror, American workers continue to have little hope for returning to the job. They are anxious about their future prospects, and while they continue to spend on necessities, they have trouble with the more substantive payments. Foreclosures and defaults continue unabated, and home sales have dropped, which will probably lead to lower home prices.
But capitalism is working, and the great malefactors of wealth are happy. Happy Thanksgiving.