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Prediction: The U.S. Economy in 2011

The New World Order

What All the hype about Christmas sales over the last few weeks masked (was) the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers’ margins. In short, profits aren’t coming from American consumers (in 2010), and profits won’t be coming from American consumers in 2011.

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“The big profits of corporations are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.

Most American workers are trapped in an L-shaped recovery. That’s bad news for the Main Streets and small businesses in 2011. It’s also a bad omen for home prices and sales, and everyone whose savings are mainly in their homes.”

Robert Reich

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