Fed's Brainard says income inequality may be hampering U.S. economy
Source: Marketwatch
Rising inequality could be a factor behind sluggish growth in the U.S. economy in the wake of the financial crisis, said Federal Reserve Governor Lael Brainard on Friday.
Consumer spending remains the main engine of growth in the U.S. and data show that the recovery in consumer spending after the crisis has been slower than would have been expected given the recovery in aggregate household income and net worth, Brainard said, in a speech at a Fed conference on community development.
Rising inequality is one plausible explanation for this trend, she said.
Research shows households with lower levels of wealth spend a larger fraction of any income gains than households with higher levels of wealth, Brainard said.
Consequently, an economy that delivers and increasing share of income gains to high-wealth households could result in less growth in consumer demand than one in which the gains are distributed more equally, Brainard said.
Read more: https://www.marketwatch.com/story/feds-brainard-says-income-inequality-may-be-hampering-us-economy-2019-05-10?mod=mw_latestnews
Interesting that someone finally has said we have a sluggish economy
BootinUp
(47,230 posts)Bernardo de La Paz
(49,089 posts)DemocracyMouse
(2,275 posts)And if it stops moving, it clots and kills the organism.
PETRUS
(3,678 posts)...if inequality was only addressed as part of an effort to boost economic growth. Inequality is a problem, full stop (i.e., whether or not it has an impact on growth), and we need to deal with it. But growth is also a problem, and we need to deal with that as well.
Bernardo de La Paz
(49,089 posts)DemocracyMouse
(2,275 posts)Our goal should NOT be growth, which is killing the planet like a cancer. It should be global health and well-being. Thus, spend less on the unnecessary and wasteful (5 second homes for the rich), and more on the mninimum necessary for well-being (a middle class-for-all paradigm. Some competition is good, and a spread of means is inevitable, but EXTREME wealth disparities is killing us.
PETRUS
(3,678 posts)Frankly, we've already consumed enough resources and generated enough waste that a contraction is inevitable. Continuing to pursue economic expansion isn't going to change that, it will only make it worse. We could choose de-growth deliberately and lessen the impact at least somewhat, but I don't see that happening. Capitalism requires growth. Taking on inequality is a steep enough uphill struggle against powerful opposition, let alone taking on capitalism itself.
brewens
(13,682 posts)everyone knows it. But it narrows the income gap and that is unacceptable to those at the top.
Bernardo de La Paz
(49,089 posts)Yavin4
(35,455 posts)Pay Americans more money so that they can buy more things and not live paycheck to paycheck.
Bernardo de La Paz
(49,089 posts)cstanleytech
(26,368 posts)hatrack
(59,608 posts)maddogesq
(1,245 posts)Weve known about this problem for years now. As said above, I am glad someone in the money world has the guts to say it.
not fooled
(5,807 posts)their problem is trying to jerry-rig the economy to produce growth without putting money in the hands of anyone except the wealthy.
ProfessorPlum
(11,285 posts)Give the people who will spend it the money instead of the people who hoard it. Money flows, economy picks up. Simple Keynesian economics.
this is so obvious that the alternate method (give $ only to people who won't spend it) was appropriately dubbed "voodoo economics" by G. H. W. Bush those many years ago.
William Seger
(10,793 posts)Blue_playwright
(1,568 posts)Nt
yaesu
(8,020 posts)Wounded Bear
(58,799 posts)they tend to ignore how many people drop out of the bottom of the middle class into poverty.
BeyondGeography
(39,399 posts)Next thing you know, theyll be talking about runaway housing, health care and education costs.
SWBTATTReg
(22,229 posts)(99% of us) a chunk of money and increase taxes on the top 1% to pay for it...make ALL of us pay for it, including those companies that somehow get away without paying a dime in taxes (Amazon, etc.).
Yavin4
(35,455 posts)Gee, people don't have enough money to spend. Maybe that's why the economy is so sluggish. Brilliant!!!
Give that man the Noble prize!!!
Marthe48
(17,152 posts)Everything costs so much. When you have housing costs, a car payment, insurance, taxes at all levels, plus school tuition if you opt for a non-public school, groceries and medicine, how is there anything left? People are passing things along, sharing, buying used, just to save a few cents.
CrispyQ
(36,581 posts)House of Roberts
(5,200 posts)Most of them rent, and share expenses with roommates.
Skittles
(153,321 posts)I remember working a minimum wage job, living in a cheap apartment, buying a used car and taking college classes, all without going into big debt......no WAY could a young person do that now
at140
(6,110 posts)Caused by excess money supply. Inflation helps large stock holders and the top 2% make bigger profits but kills the middle class ordinary working folks. Those $Trillion+ yearly deficits are accelerating wealth transfer from middle class to the Uber rich.
Skittles
(153,321 posts)the way they are saddling people trying to get an education with HUGE debt, the way paychecks have NOT kept up, the gig economy very often with inadequate pay and no benefits, the expectation that they need to fund ALL of their retirement, the extreme increase in medical and dental costs.....everything is truly screwed up now
at140
(6,110 posts)When my daughter was in law school, she had friends in law school using student loans to buy cars and go on vacations. Students don't need any equity to back up loans. The college's can jack up the fees knowing students can get easy loans.
The artificial low interest rates (lower than real inflation rate we live with) is the reason for bubbles in hard assets like stocks & houses.
at140
(6,110 posts)Costs! At age 57 I had high blood pressure, chest pains after eating a good meal, hip joint pain, fainting spells at job, and was border line diabetic.
So I resigned from the job, simplified my life, moved to a cheaper cost of living area and began exercise routine. Now at age 79, no more high blood pressure, no more hip joint pain, no longer border line diabetic, and off all medications! I signed up with Humana HMO Medicare advantage plan which costs nothing in premiums and actually
pays me $55/every month to stay on the plan!
Skittles
(153,321 posts)why did you wait until you were very ill to start exercising? I always wonder about that.
at140
(6,110 posts)Job, needed the money to raise family. Left me little time or energy for exercise. And it is very hard to give up a well paying job. But I saw only options were drop dead or give up the money and live a bit longer.
Skittles
(153,321 posts)glad your are feeling better
yonder
(9,687 posts)to sock away and/or spend on non-necessities. Minimum wage in 1970 was what, like $1.45/hour maybe $1.90? I had a friend who was making $4.00/hour back then - we considered him rich.
The one site I looked at said $10.00 in 1970 was worth $66.64 in 2019 dollars. I don't think the working women and men of this country, the consumers and producers, the folks who sweat and freeze in often dangerous jobs, the very people who keep our system going, are keeping up.
CrispyQ
(36,581 posts)This book is really old, 2004, I think, but the one stat I remember he mentioned is that if minimum wage had kept up with CEO pay since 1990, it would be approximately $23 an hour. That was back then. Wonder what it would be now?
CrispyQ
(36,581 posts)I put myself through college with a good paying part time union job. If you were born in/after 1980, all you've ever heard is that unions are bad. If you punch a time clock, or even if you don't, but your salary is the majority of your household income, then you are labor. My engineer friends don't want to be categorized with labor, but they are.
Skittles
(153,321 posts)imagine that
democratisphere
(17,235 posts)Where the hell did this finally come from?
shanny
(6,709 posts)"Research shows"? Eff me. Our overlords are pretty fucking stoopid, end of story.
MurrayDelph
(5,307 posts)involves a Conan Doyle character and a declaration of constipation.