1/5
WSJ: "Labor’s share of gross domestic income (conceptually similar to GDP) sank to 51%, the lowest since records began in 1947. Profits’ share climbed to 12.1%, the highest since 1950."
@greg_ip
wsj.com/finance/stocks…
2/5
Greg Ip has a good track record of zeroing in on the key point. The profit share of GDP is rising, he notes, but the wage share is declining. This is a problem, because, as Marriner Eccles explained in the 1930s, it is overall wage growth that sustains production growth.
3/5
If the US were running a trade surplus, it would be net foreign demand that balances the gap between the two. The fact that it is instead running a trade deficit suggests that domestic demand is being propped up by rising fiscal and household debt.
nber.org/system/files/w…
4/5
By the way the fact that the US is running huge current account deficits in spite of running some of the highest levels of income inequality in its history (income inequality should force up the saving rate just as much as "fiscal discipline" would) suggests that it...
5/5
is not low American saving that drives the US trade deficit, but rather large, persistent US trade deficits (driven mainly by the need of surplus countries to exchange their surpluses for claims on US assets) that drive down US saving.
imf.org/en/publication…
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