Tuesday, May 10, 2011

What Is The Definition Of Recession?

     The Consumer Price Index (CPI), which includes the price of gasoline and food, shows an increase of 2.7% over March, 2010. Gasoline at the pump rose 5.6% in March alone, and is now 27.5% higher than it was a year ago. Food is 2.9% higher than it was at March 31st, 2010.
     Economists generally consider the core-CPI, which excludes energy and food prices, to be a better indicator of long-term inflation. At March 31st this index was just 1.2% higher than it was a year earlier – hardly a harbinger of runaway inflation. Unfortunately, most of us have to live with short-term inflation; regardless of what the price at the pump will be in six months, we have to deal with it today.
     According to the U.S. Bureau of Labor Statistics (USBLS), in spite of a 0.6 increase in average weekly hours worked, real average weekly earnings for all employees decreased 0.4% between March 2010 and March 2011. People are working longer and getting paid less! Even though the inflation low, employees are less able to cope with it in 2011 than they were in 2010. For people who depend on their paycheck for a living, the recession is getting worse.
     As they say on infomercials: “But wait – there's more.” A few days ago the news media were all trumpeting the USBLS announcement that 244,000 new jobs were created in April, thus proving that recovery is under way. However, the small print in the announcement stated that the unemployment rate increased from 8.8% to 9.0%. The number of new jobs created is not keeping pace with the number of people entering the job market! This is coming out of a recession?
     But the stock market is going great – the Dow Jones Industrial Average has gone up 20.14% in the last year. Multinational corporations are sitting on trillions of dollars. How can this be?
     Here is an example: In 2005, 51% of General Electric's employees were in the U.S. By 2009 only 47% were - the actual number decreased by 27,000.
     In 2009, GE reported a profit of $14.2 billion; $5.1 billion was from within the U.S. The U.S. corporate tax rate is 35%. How much U.S. tax did GE pay? 35% of $14.2B or 35% of $5.1B? Guess again. They claimed a U.S. tax CREDIT of $3.2 billion. It appears the company's slogan “Imagination at Work” applies to its huge (over 900 attorneys and accountants) Tax Department as well as to its products.
     Don't get me wrong – GE is not an isolated example. On February 1st the New York times reported that, “Over the last five years, ..., Boeing paid a total tax rate of just 4.5 percent, according to Capital IQ. Southwest Airlines paid 6.3 percent. And the list goes on: Yahoo paid 7.0 percent [and] Prudential Financial, 7.6 percent.”
     A recent headline proclaimed that “CEO pay exceeds pre-recession level.” According to the AP, “The typical pay package for the head of a company in the Standard and Poor's 500 was $9 million in 2010.” Those huge salaries were paid out of the pockets of American taxpayers.
     Like beauty, recession is in the eye of the beholder. If one is beholding down from the top, recession does not exist. It has a far different definition if one is looking up from the bottom.
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     The action of the Spirit holds each atomic nucleus together and tethers its orbiting electrons to it; the Spirit also holds planets, comets and other stellar bodies in their orbits. An interaction of the Spirit between an occupied volume and an empty volume of space/time is called a force, as is an interaction between two occupied volumes of space/time, e.g. gravity.
     Matter Matters – The Spirit Runs Through It.

“The Spirit Runs Through It” and “There Are Only Seven Jokes” are available in paperback, or at the Kindle Store.

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