The "Upside-Down" Economy

In this recovery, the distribution of economic gains has clearly been upside-down. While business profits are soaring to record levels, income growth is extremely slow and wage and employment gains have lagged significantly. Despite the rise in corporate profitability, these earnings are not being reinvested in the creation of good paying jobs and productive capital. Workers, therefore, have not reaped their fair share of the productivity gains in the past few years. In addition, sluggish income growth has caused household consumption to increase through borrowing, creating a debt-driven recovery that is not sustainable. A recent American Progress event highlighted the high costs of this upside-down economy and the policy solutions that can correct this trend.

Righting the Upside-Down Economy: Creating a Sustainable Recovery, July 1, 2004
In this recovery the distribution of economic gains has clearly been upside-down. While business profits are soaring to record levels, income growth is extremely slow and wage and employment gains have lagged significantly. More...
• Eileen Appelbaum's PowerPoint Presentation
• Audio: Krugman Keynote | Other Highlights
• Video: Introduction, Cassandra Butts | Keynote, Paul Krugman | Panel: Scott Lilly, Eileen Applebaum, James Galbraith, Robert Manning | Closing Remarks, Gene Sperling
• Transcripts: Complete Transcript | Keynote: Paul Krugman | Panel: Eileen Appelbaum, James Galbraith, Robert Manning

CEO Pay Soars, While Middle Class Struggles, by Christian Weller and John Alexander Burton, April 12, 2005
Four years into the business cycle, the fortunes of CEOs and middle-class families are pulling further apart. While inflation adjusted earnings in 2004 were on average below those in 2003 and 2002, CEO pay soared.

Rising Personal Bankruptcies, by Christian Weller and Alanna Gino, February 18, 2005
By 2003, the personal bankruptcy rate reached a record high. Across the country, a number of states showed disproportionately high incidences of personal bankruptcy.

Lagging Investment: The Cost of the Upside-Down Economy, by Christian E. Weller, July 1, 2004
The current economic recovery has been unique in many respects. It was the first "job loss" recovery since World War II. For most of the first two years of the recovery, total employment was below the levels at the start of the recovery.

Can Consumer Purchasing Power Sustain the Current Economic Recovery?, by Scott Lilly, July 1, 2004
The Federal Reserve chairman, every official within this administration, most market analysts and a majority of financial writers agree that the outlook for the American economy is good if not excellent.

Is the Strong Recovery Sustainable?, by Christian E. Weller, June 10, 2004
The economy seems to be looking brighter. After years of a weak economic recovery, where more jobs were lost than gained, the labor market finally gained some steam in March of this year.

Employment Numbers Rise Too Slow to Offset Sharp Decline in Household Cash Flow, June 4, 2004
The Labor Department's report this morning indicates that the unusually low interest rates enjoyed by U.S. consumers during the later months of 2003 and the early months of 2004 continued to drive economic activity and job growth through the month of May.

Statement of Scott Lilly On the June Employment Report, July 2, 2004
This morning's report from the Labor Department paints a grim picture concerning the prospects for the U.S. economy and for working families.

'Upside-Down' Economy Takes a Bite out of Middle Class Wallets, by Christian E. Weller and Radha Chaurushiya, May 28, 2004
The distribution of economic gains is upside-down in this recovery, compared to previous ones. Profits received a larger share of national income than wages.

Reversing the 'Upside-Down' Economy, by Christian E. Weller, May 10, 2004
The current economic recovery often has been described as a "job-loss" recovery, which is meant to capture a new quality to this recovery – a shrinking labor market among a growing economy.

Today's Job Loss Worse; Recovery Weaker, May 4, 2004
The current job recovery is unlikely to last through the remainder of this year according to a study released on May 5 by the Center for American Progress.