There's a difference between structural problems faced by US capitalism today (what I call the underconsumption undertow) and the short-term dynamics of the system (the business cycle). This difference is largely because of debt accumulation.
It's true that profit rates rose to 1997 -- but they never reached the peak of previous decades, so the employers' offensive (i.e., the effort to cut wages and public consumption by non-capitalists) continued. Also, once the neoliberal policy revolution had happened in about 1979/80, the capitalists accumulated political power and shifted the distribution in their favor simply because they could. (You can see this in the current feeding frenzy in Washington...)
Given a general stagnation in wages (due to the employers' offensive), consumption has largely been driven by debt accumulation and by upper-crust spending (two sources which overlap). These days, debt accumulation is based on temporary asset inflation (the housing bubble).
Even in the 1990s boom, consumption didn't seem to rise enough to justify all the business fixed investment. Some of it was over-investment (fiber optics, dot-coms, etc.) Then, in 2001, investment fell drastically, which meant that consumption (bouyed by the housing bubble) rose as a percentage of GDP.
In recent years, businesses have been successful at raising profits, as Doug notes. But I'd say that the rise in consumption has largely been the result of debt accumulation.
I'm ignoring the international dimensions, but I don't have the time... JD
me:
> >The effort to raise profit rates suppresses
> >consumer demand, which causes a surplus of capital. (cf.
> >http://www.lines-magazine.org/articles/chris.htm)
Doug:
> Profit rates rose in the U.S. from the early 1980s through 1997, and
> the consumption share of GDP rose as well (from around 62% to 66%).
> Profit rates fell between 1997 and 2001, and the consumption share
> rose to almost 69%. Profit rates have risen since 2001, and the
> consumption share is now over 70%.
>
> Maybe this is a special case in history, and/or maybe the US is a
> special place, but the general principle needs a visit to the shop.