What will happen to the US economy in 2011? If you're referring to profits of big corporations and Wall Street, next year is likely to be a good one. But if you're referring to average American workers, far from good.
The big disconnect between corporate profits and jobs is likely to continue because America's big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.
In a typical recovery, profits lead to more hiring. That's because in a typical recovery, American consumers head back to the malls — and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked 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 — and profits won't be coming from American consumers in 2011.
Most Americans don't have the dough. They're still deep in debt, can't borrow against their homes, and have to start saving for retirement.
I have no debt whatsoever, own my home outright and have no need or desire to borrow against it, have saved all the money I could and hope it lasts.
I'm almost not part of this economy and have never been so glad of anything in my life.
I'm OK for the foreseeable future and hope you are too.