The Goldilocks Economy...or not?

Krugman, in an off-base slant, informs us that although the G.D.P. of the U.S. is rising, it isn't showing up in workers' wages because it's going to (no surprise!) corporate profits, to rising health care costs and to a surge in executive compensation. Zimran enlightens in his post that although executive compensation in the US may be significantly disproportionate to the value created by executives, it's still a tiny fraction of money compared to total wage payout:

"Even if every executive in the US was paid $0, workers would not get much extra money (last time I calculated that figure it was around $30 extra per year per worker).."

Present other substantiations of the above argument, we might conclude that more plausible reasons for the lack of increase in workers' wages include macro shifts in the world economy and the U.S.'s ability (or lack of) to discern sources of competitive advantage in this shifting economy. Some economists suggest that these shifts speak for a new "Goldilocks Economy" which is not too good, not too bad. For example, India and China have emerged as significant sources of productive capital that enable good and services to be produced at lower costs. So, as a U.S. consumer, while my bonuses and wage raises have been stalled, low inflation rates are not reducing my real wages and the goods and services that I consume are getting cheaper.

While I agree in part with this argument, I still think the "not so good" part of the Goldilocks economy is that the "not so bad" is not being heard. The New York Times grudgingly pointed to the good news in its recent article "Suggestions of Strength in Economy" -

• Last year, the economy grew at an annual rate of 4.2%. Preliminary estimates for the last quarter are approximately 3.4% for the last quarter. This is the ninth straight quarter in which the economy has grown at more than 3%. The NY Times article points out that this was below expectations but heck, while we're applauding the Clinton administration, it compares with a 2.1 percent rate, and falling, in the last quarter of the Clinton administration.
• Record levels of spending by businesses and households have seen depletion of inventory levels, setting the stage for faster economic growth during the rest of the year.
• Real compensation was growing at an annual rate of 2.8 percent when Bush was settling into the White House; it grew at a significantly faster 3.9 percent rate in the first quarter of this year.
• When Bill Clinton left office almost 138 million Americans were at work; this June, that figure stood at close to 142 million.

Not all is well though. Inequality as measured by the gini index, has increased from 40.8 in 2000 to 43.5 (a value of zero represents perfect equality, a value of 100 perfect inequality, or a situation where one individual has all of the income). Add to this a bad fiscal situation, an ailing tax reform, and an unemployment rate of close to 5%. Not so good.

Still, on balance, there's opportunity for trumpeting. And it seems like its not so much a mixed bag - not so good, not so bad. Its more good.