It is, you might say, the best of times, and the worst of times.
Call it a tale of two economies. Across a range of measures, the current "recovery" is among the weakest since the government began keeping records. Meanwhile, American corporations, which already have been raking in massive profits, are poised to report strong second quarter profits. And despite that imbalance, one economic commentator notes that those same corporations are still lobbying for more tax breaks--concerns over the deficit be damned.
The Great Recession officially ended in June 2009, but the recovery has been lackluster in the extreme. It's not just the 9.1 percent unemployment rate, the nearly 14 million jobless, or the anemic 1.8 percent GDP growth in the first quarter--numbers we're all familiar with at this point.
As the Wall Street Journal reports, banks are lending less money now--both through credit card lines and home loans--than when the recovery began, according to numbers from the New York Fed.
And although household debt is lower than it was at the height of the boom, it's still high enough to exert a severe drag on the economy. In 2007, the average household had borrowed 127 percent of its annual income to fund purchases. That's now down to 112 percent--in part because banks have written off some debt as uncollectable. But it could take years before it descends the average level for the 1990s, 84 percent, which experts say is a healthier mark.
So, things are bleak--but not for American companies and shareholders. The Journal reports separately that according to an analysis by Brown Brothers Harriman, second-quarter earnings for companies in the Standard & Poor's 500-stock index are expected to rise by 13.6 percent compared to a year ago, when they're announced later this month.
That news comes after U.S. companies reported record profits last year. And rather than using that cash to hire workers, they sat on more of it than ever before.
Given all this, you might expect that corporations would at least be doing what they can to help solve the deficit problem that many experts say imperils the long-term stability of the economy. But as David Leonhardt of the New York Times observes today, the opposite is the case.
Leonhardt uses as an example the Business Roundtable, a trade group that's generally seen as moderate, and talks about the deficit problem in sober, restrained tones. But lately, he writes, its actions are telling a different story:
Rhetoric aside, it consistently lobbies for a higher deficit. The roundtable defends corporate tax loopholes and even argues for new ones. It pushes for a lower corporate tax rate. It favors the permanent extension of the Bush tax cuts. It opposes a reduction in the tax subsidy for health insurance, a reduction that was part of the 2009 health reform bill. Oh, and the roundtable also favors new spending on roads, bridges and other infrastructure.
It's not just the Roundtable. Leonhardt continues:
Today's business groups struggle to come up with any specific deficit plan. Last year, the Business Council—a group of top corporate executives headed by Jamie Dimon of JPMorgan Chase—and the roundtable released a 49-page plan that simultaneously warned that projected deficits would "retard future growth" and called for policies that would add hundreds of billions of dollars a year to the deficit.
So to recap: This recovery is among the weakest since World War Two. But three years after the financial industry caused the economy to tank, corporations are doing better than ever, without using their profits to hire people. Meanwhile, they're lobbying for more tax breaks, which would make the deficit problem worse.