By Dave Lindorff
It's entertaining to watch and to read reports in the corporate media about the current stock market decline, which over the course of the last six business days erased $2.1 trillion in the market value of stocks of publicly-traded US corporations (and in a lot of ordinary Americans' retirement savings).
CNN, in an article on Wednesday, had a piece on its CNN Money website saying not to worry about the market crashing, because, "At the moment, the US economy looks healthy. It's on track to grow about 2% this year, and unemployment is back at the low levels it was at prior to the Great Recession."
The New York Times, also on Wednesday, did acknowledge that there were some issues that had been "overlooked" that were now getting attention, but the article focussed entirely abroad, not at the US itself. It argued that the US economy is not as immune from global economic slowdowns as many analysts had believed. For example, while trade with China may only account for some 2% of US GDP, much of the rest of the world, including large parts of Asia and Australia, as well as Europe, are heavily dependent upon trade with China, and the US economy is linked to all of them. So, the article concluded, if China's economy stalls, as appears to be happening, most of the world stalls, and that would cause problems for the US too.
Let's look at both of these arguments more closely though.
First of all, anyone who says the US economy "looks healthy" isn't looking very closely. A 2% growth rate is hardly anything to crow about, and since the Fiscal Crisis, when growth was negative, the US economy has struggled to do much more than 2% per year, with the best year being 2014 when it made it to 2.4%. Compare that to the 1990s, when there were five years of growth rates of 4% a year or more, and only two years of below 2% growth rates.
Typically economies, the US economy included, show dramatically higher growth coming off of a recession, and usually too, the deeper the recession, the more dramatic the post-recession rebound. This time we have not seen that happen. Instead there has been anemic "recovery" since 2009.
Add to that the fact that growth itself is a questionable statistic. As the wage and wealth gap in the US has stretched into a chasm, most of the "growth" in the US economy, especially since the Fiscal Crisis, has gone to the top 10% and in fact the top 1% of the population. That may be great for the wealthy, but if you have an economy basically lives and dies on consumer spending, it leaves ever fewer people having to do all that spending, with the rest just scraping by.