Artesia News

Economy: Is this as good as it's going to get?

From April to June, sales in Artesia were 9.5 percent higher than the same quarter one year ago.

Unfortunately, it was higher fuel prices that helped boost sales, and were primarily responsible for the increase. The city experienced a moderate sales quarter for restaurants, business, industry, and autos & transportation.

Regionwide, L.A. County has seen an 8.4 percent increase in sales, and the State of California has seen a 9.4 percent increase. This marks the sixth consecutive quarter of growth since the recovery began.

Like Artesia, higher fuel prices accounted for much of the statewide increase. Easing consumer credit, sales incentives and pent-up demand led to gains in new auto sales while consumers also showed signs of spending more freely in specialty stores, home furnishings, apparel, jewelry, and restaurants.

So, the good news is that the economy is in recovery, the bad news is this may be as good as it gets according to a recent International Monetary Fund report which highlights problems caused by a shift into an “hourglass economy.”

An hourglass economy is characterized by a large and expanding group at the top with high skills and high incomes offset by an expanding group at the bottom with low skills and low pay.

The middle levels traditionally composed of skilled or semi-manual workers in good-paying ujobs continue to decline, giving the occupational income profile of the economy its distinctive shape.

The 2010 Census revealed that most Americans’ inflation-adjusted incomes were either stagnate or in decline with the proportion of people living in poverty now at 15.3 percent while 24 percent of the nation’s wealth is concentrated in the top 1/10^th of one percent.

Consumer spending has historically accounted for 70 percent of economic output and with the wealthiest five percent of Americans now accounting for 37 percent of all consumer spending, retailers are bifurcating their marketing strategies into sales of high end and low end goods, while reducing offerings for the disappearing middle class.

Economists say the dependency on just a small portion of the population for increased spending limits future growth potential and foster more boom and bust cycles. This is because the wealthy splurge and speculate when their savings are doing well and quickly cut back when the value of their assets tumble.

Analysts further argue that this lack of growth potential is why major corporations are sitting on record profits and not investing in more employees.