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Commentary

REICH: A tale of two U.S. economies

Marketplace Staff Dec 29, 2010
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Commentary

REICH: A tale of two U.S. economies

Marketplace Staff Dec 29, 2010
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TEXT OF COMMENTARY

Bob Moon: It seems appropriate to borrow a line from Charles Dickens this time of year. As in, we’ve got one of those “best of times, worst of times” things going on in America right now — so says commentator Robert Reich. He’s worried that our winter of hope might just give way to a spring of despair for many Americans.


Robert Reich: What will happen to the U.S. economy in 2011? Well, that depends on which economy you’re talking about. If you’re referring to profits of big corporations and Wall Street, next year could be fabulous. But if you’re referring to average American workers, not so good.

You see, there are two economies in America right now, and they’re going in different directions. That’s because America’s big businesses depend less and less on U.S. sales and workers. In 2010, they racked up giant profits by selling in China, India and other fast-growing countries. And also by keeping U.S. payrolls down — doing more with fewer American workers.

Expect the same in 2011. General Motors is now making more cars in China than in the U.S., and two-thirds of its total sales are coming from abroad. Wal-Mart isn’t doing especially well in America but Wal-Mart International is booming. General Electric is keeping its payrolls down in the U.S., but plans to invest half a billion dollars in Brazil and hire 1,000 Brazilians, and invest $2 billion in China.

Corporate America is in a V-shaped recovery. Which is great news for investors and everyone whose savings are mainly in financial instruments. Also great news for executives and Wall Street traders. But most American workers are in an L-shaped recovery. That’s bad news for Main Streets and small businesses. Also a bad omen for home prices and sales, and everyone whose savings are mainly in their homes. And it doesn’t bode well for U.S. employment, which is likely to remain high.

In other words, whether 2011 is a great year economically depends which economy you’re in — the one that’s rising with the profits of big business and Wall Street, or the one that’s still struggling with few jobs and lousy wages.

Here’s to a happy and healthy new year for you, even if it’s not all that prosperous.

Moon: Robert Reich was secretary of labor for President Clinton. His most recent book is called “Aftershock: The Next Economy and America’s Future.” Next week, it’s commentator David Frum’s turn. Your turn to talk back is, any time you want to.

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