Unemployment, Corporate Profits, and Luxury Sales all on the rise

Reading the headlines in the New York Times and the Financial Times the last couple of days almost gives me whiplash: unemployment remains at a post-war near-record high and S&P downgraded U.S. sovereign debt while luxury retailers are booming and corporate profits are at all time highs.  Something is amiss, and I fear it is not with the data.

from Wikipedia

Floyd Norris, writing in the New York Times, shows that in recent years corporate profits have risen as workers' incomes have declined (even including the dramatic rise of benefits, especially medical benefits, for those fortunate enough to have benefits. : 

Retail sales are up significantly in July over the previous year.  Yet, The Financial Times
argues that this "conceals a bleaker picture in which a conspicuous minority of wealthy shoppers are outnumbered by a beleaguered majority."

The budget deficit is a serious problem--but we have more pressing problems at the moment.  If we do not invest in infrastructure, research, and education both as a current stimulus and as a long term investment, we risk losing our global competitiveness.