Kevin Drum has another of his excellent charts.
Everything in the economy (except corporate profits) is running a lot lower than has been true in past average economic recoveries. If real wages have not increased in five years, while employment, equipment and software investment and residential investment are all running well below average, where are the corporate profits going? The profits are effectively skimming the renewal capabilities out of the economy and replacing very little.
Any economy is demand-oriented. For the overall economy to grow, demand has to grow. But demand is two-thirds consumer demand and a quarter investment demand. If employment is not increasing significantly and wages are not increasing, then there is no increase in consumer demand. Without increasing consumer demand, why invest in growing a business? The only thing remaining is government spending, which is no more than 7% of the economic demand and as we all know is being increased but is based on borrowed money.
There doesn't seem to be much room for economic growth with that model working.
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