Tuesday, May 17, 2016

Is the economy slowing?

From Robert Reich

The stock market closed lower Friday as more retailers reported plunging first-quarter sales.

What's going on?

Understand these 7 points:
1. Consumer spending is 70 percent of U.S. economic activity.
2. Consumers are also workers.
3. As the median wage drops (median family income is lower than it was in 2000), workers don’t have enough money to buy what the economy is capable of producing.
4. When workers don’t have enough money to buy what the economy is capable of producing, retail sales drop and corporate profits sink.
5. When sales drop and profits sink, the stock market slumps.
6. The savings of wealthy Americans constitute most of the stock market.
7. Ergo: Wealthy Americans would do better if the wages of most workers rose rather than fell.

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