It is too early to know how the holiday retail season turns out, but some early indicators are not good. According to the National Retail Federation, sales through the entire Black Friday weekend actually declined by 3.9 percent compared with the same period last year.
The data will be noisy until after the first of next year, but some metrics are clear.
The average American family makes less, adjusted for inflation, than it did in 1989. Although productivity has risen, wages have largely stagnated. Nearly 40 percent of workers made less than $20,000 in 2012. Older workers are increasingly left to work in the low-wage fast-food sector.
The lowest-income households have barely seen any growth in recent decades. Economic mobility, once a cornerstone of a growing middle class, has become more difficult. Even before the devastating Great Recession, the top 1 percent (and the top one-hundredth of 1 percent) had seen their share of income skyrocket.
Meanwhile, although household debt as a percentage of GDP has improved since 2009, it remains much higher than before starting to skyrocket in the 1980s.
Put it all together, and our globalized, redistribute-income-upward economic policies are starting to produce a situation where more people don’t have the disposable income — or the credit — to support a shopping economy.
Wal-Mart, which set the template for low wages followed by so many others, is underperforming precisely because “everyday low prices” can’t compensate for a cratering American middle class, which was built on good jobs, secure employment, full-time and well-paying work and strong unions.
Another way to look at our problem is to break out of “1 percent” inequality paradigm, although we face inequality not seen since the Gilded Age. We have a crisis of low-wage jobs, on top of a crisis of high unemployment. And the political system won’t seriously address it.
The New York Times ran a story Sunday about how buying clothing made in America is so expensive that only the well off can afford it.
Today, only about 2 percent of apparel on our shelves is made in this country. In the 1990s, it was about 50 percent, made by workers making relatively decent wages.
The difference? Then we had tariffs. Alexander Hamilton-style economics to protect American industry, hence jobs and purchasing power.
There, I said it.
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Today’s Econ Haiku:
‘Out, damned Machinists!’
‘Shall I compare thy tax breaks?’
Boeing plays Shakespeare