I do not see any way that the US economy can rebound back to its average yearly income growth of 5 percent after inflation from 1982 through to 2007. Remember coincident with that rapid growth in incomes, the value of all US stocks soared from $1 trillion at the end of 1982 to $22 trillion in 2007. A 22-bagger. However, since the economy bottomed in 2009, nominal growth in wages and salaries has averaged about 3 percent per year, and that’s before, not after inflation. Yet, despite the current slow growth environment stock prices again are at record highs.

One way to get a real picture of the sorry state of the economy and its meager growth is by looking at the withheld income and employment taxes from the 135 million of us with jobs which flows into the US Treasury daily. It shows that the US economy is barely growing. After-tax incomes including capital gains and the like will be up by $300 billion this year. That is pretty meager results compared with the trillion dollars of new money created this year by the Federal Reserve and $800 billion in US government deficit spending.

Therefore given the realities as I see it, I am amazed by the financial community’s consensus that the US economy is in a sustainable recovery and therefore the Fed can taper off its $85 billion in monthly new money creation.

As I see it, the bulls’ evidence for a sustainably growing economy is first, there has to be a significant wealth effect as the stock market soars. Second, housing is back. Third, lots of jobs are being added. And fourth the deficit is shrinking because tax revenue is surging, both for the US government and the states, and fifth, therefore that must mean the underlying economy is improving.

All five points have some truth to them but lead to the wrong conclusion about the economy.

Yes, there is a wealth effect since the stock market is up by $2.5 trillion so far this year. Definitely high end retailing and NY condos are doing well. But that is not the US economy. Individuals are not playing here, so while the rich are getting richer, the wealth effect is only having a marginal impact on the total economy. And when stocks stop rising, the impact from a negative wealth impact is likely to be much worse.

6---Personal Income declined slightly in April, Spending declined 0.2% , calculated risk

7---Debt and Growth: The State of the Debate (more on R-R), Krugman, NYT

8---The Big Picture
Bullish Sentiment Drops Back Below Average
Source: Bespoke

9--Richard Koo’s newest paper: About the Ineffectiveness of Monetary Expansion, snbchf

Once again...
Similarly the monetary base compared to credit to private sector:
Monetary Base vs Credit to Private Sector
For comparison the Swiss credit to private sector has increased from 100 in 2008 to total debtors of 110 and to Swiss debtors to 115. (source Source SNB month bulletin, page 44).

10---Central Banks' Central Bank Warns About Rehypothecation Threats, zero hedge

11---Labor union decline, not computerization, main cause of rising corporate profits, EurekAlert: economists view

A new study suggests that the decline of labor unions, partly as an outcome of computerization, is the main reason why U.S. corporate profits have surged as a share of national income while workers' wages and other compensation have declined.
The study, "The Capitalist Machine: Computerization, Workers' Power, and the Decline in Labor's Share within U.S. Industries," which appears in the June issue of the American Sociological Review, explores an important dimension of economic inequality...
Tali Kristal, an assistant professor of sociology at the University of Haifa in Israel ... found that from 1979 through 2007, labor's share of national income in the U.S. private sector decreased by six percentage points. This means that if labor's share had stayed at its 1979 level (about 64 percent of national income), the 120 million American workers employed in the private sector in 2007 would have received as a group an additional $600 billion, or an average of more than $5,000 per worker, Kristal said.
"However, this huge amount of money did not go to the workers," Kristal said. "Instead, it went to corporate profits, mostly benefiting very wealthy individuals."
The question is: why did this happen?
"Some economists contend that computerization is the primary cause and that it has increased the productivity of machines and skilled workers, prompting firms to reduce their overall demand for labor, which resulted in the rise of corporate profits at the expense of workers' compensation," Kristal said. "But, if that were the case,... then labor's share should have declined in all economic sectors, reflecting the fact that computerization has occurred across the board in the past 30 to 40 years."
This is not the case, however... "It was highly unionized industries — construction, manufacturing, and transportation — that saw a large decline in labor's share of income," Kristal said. "By contrast, in the lightly unionized industries of trade, finance, and services, workers' share stayed relatively constant or even increased. So, what we have is a large decrease in labor's share of income and a significant increase in capitalists' share in industries where unionization declined, and hardly any change in industries where unions never had much of a presence. This suggests that waning unionization, which led to the erosion of rank-and file workers' bargaining power, was the main force behind the decline in labor's share of national income."
 12---Imperialism, Syria, and the threat of world war, wsws
13---Thousands blockade European Central Bank in Frankfurt, RT

14---Let's Be Clear: Establishing a 'No-Fly Zone' Is an Act of War, Atlantic

15--Overworked America: 12 Charts That Will Make Your Blood Boil, Mother Jones

You have nothing to lose but your gains

Productivity has surged, but income and wages have stagnated for most Americans. If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.

Growth is back...