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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (53515)	2/12/2006 12:20:10 AM
From: mishedlo	Read Replies (4) \| Respond to of 110194

How does unequal income shed any light on GDP? You stated and I repeat in bold: Hard to imagine the US is in a recession with personal income tax receipts up so sharply over the previous year. I responded with How hard is it to believe how grossly unequal those receipts were? I bet most of the increase went to 5% of the people. =========================================================== Here is my answer to your response question: If as I suspect that income distribution was very unequal, perhaps as much as the bottom 80% or even 90% simply have no more money to spend. The fact that fat cats made a ton of bonuses does not mean they will spend it. The bottom 30% sure would. So yes, unequal income distribution will affect spending and thus it could mask a severe problem which means your statement on the surface about a recession is surely short sighted. The extreme case would be 1,000 people making billions and sudden drop by everyone else to zero. Obviously there would be an instant crash of our economy. I believe that recent jump in income was bonuses that went to those that need it least and are also least likely to spend it. To ignore income distribution is a mistake. Is that so hard to understand? Note: we do not know what the distribution was but we can easily suspect. Mish