Without question, the economy is growing, and the Republicans are jumping all over it as a sign of how wonderful they are. But, what does it mean to the average American and are the numbers all that they are cracked up to be?
Bush's Expansion Leaves Workers Behind, Sparking Fed Friction
By Craig Torres and Alex Tanzi
Jan. 17 (Bloomberg) -- American workers have rarely taken home a smaller share of the nation's prosperity, a condition that is undermining bipartisan support for free trade and creating friction between President George W. Bush's administration and the Federal Reserve.
After 16 consecutive quarters of economic growth, pay is rising at a slower rate than in any similar expansion since the end of World War II. Companies are paying less of their cash gains in the form of wages and salaries than at any time since the Great Depression, according to government figures.
Such a disparity, partly the result of globalization of the labor market, helps explain why the Bush administration is struggling to muster support for lower trade barriers even with the jobless rate at a four-year low. The imbalance has also triggered a debate between Bush's Treasury Department and the Fed about how low unemployment can go without kindling inflation.
``There is no doubt that something is happening'' to reduce labor's share of income, says Robert Solow, a Nobel Prize- winning economist and professor emeritus at Massachusetts Institute of Technology in Cambridge. An economy that doesn't distribute its gains widely is ``poorly performing,'' he says.
From the final quarter of 2001 through last year's third quarter, total compensation paid to employees by corporations, including health benefits, rose at a 4.3 percent average annual rate, according to government figures. That's the slowest growth for any similar period in post-war expansions lasting at least four years.