U.S. annualized real GDP growth of 1.2% through Q3 2011 was driven by personal consumption, accounting for 91% of it. Yet only 44% of personal consumption growth was driven by higher incomes. The other 56% was accounted for by unsustainable items: a decline in savings (36%) and the payroll tax cut (20%). The latter will expire in two months time unless Congress acts to extend it again.
- Blog Post