Fed's Brainard says income inequality may be hampering U.S. economy

[UpInArms]

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

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Interesting that someone finally has said we have a sluggish economy

[BootinUp]

1. I've been saying this for 10 years. Nt

[Bernardo de La Paz]

4. Me too, almost as long. Rich park money. Working class spend money. Money in motion fuels economy.nt

[DemocracyMouse]

15. Money is like blood. If it moves, the body is oxygenated and energized...

And if it stops moving, it clots and kills the organism.

[PETRUS]

19. I would be profoundly disappointed...

...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]

22. Absolutely. These levels of inequality unsustainable. End peacefully (US 19th c) or 1789/1917. . .nt

[DemocracyMouse]

36. That's why I suggested a biological metaphor for the circulation of money in the system.

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]

40. Yes. I thought we might be on the same page.

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]

2. Ya think? Notice they never try a working class only tax cut. Trickle up economics works and

everyone knows it. But it narrows the income gap and that is unacceptable to those at the top.

[Bernardo de La Paz]

7. Trickle up? It's more like a geyser up! It's money really in motion. . . . nt

[Yavin4]

18. How about raise the minimum wage on a the federal level?

Pay Americans more money so that they can buy more things and not live paycheck to paycheck.

[Bernardo de La Paz]

23. As Republicons love to say "A rising tide lifts all boats" even though it was JFK who said it. . .nt

[cstanleytech]

3. Well no shit!!!

[hatrack]

5. NO!!!

[maddogesq]

6. 1...2...3...well duhhh.

We’ve 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]

8. They know this

their problem is trying to jerry-rig the economy to produce growth without putting money in the hands of anyone except the wealthy.

[ProfessorPlum]

9. gee, there's a lightning bolt

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. "We all do better when we all do better" - Paul Wellstone

[Blue_playwright]

14. Aw. Wish he were still here.

Nt

[yaesu]

11. it will destroy the economy & the country. nt

[Wounded Bear]

12. They love to publish how many millionaires are created...

they tend to ignore how many people drop out of the bottom of the middle class into poverty.

[BeyondGeography]

13. Ya think?

Next thing you know, they’ll be talking about runaway housing, health care and education costs.

[SWBTATTReg]

16. Thus based upon this finding, an easy way to pump the economy is to give everyone ...

(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]

17. This is the kind of genius that lands you those big positions at the Fed.

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]

20. I don't know how most families are making it

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]

21. Rent is $1000 a bedroom in my area. Starter homes are over $300K.

I don't know how young people are doing it.

[House of Roberts]

24. To start, they likely don't live in your area.

Most of them rent, and share expenses with roommates.

[Skittles]

26. young folk have it SOOOOO much harder than when I was young

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]

28. It is called inflation

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]

29. it is WAY more than inflation

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]

30. It is just too easy to get student loans

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]

32. And don't even get me started on healthcare

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]

33. I am just curious but

why did you wait until you were very ill to start exercising? I always wonder about that.

[at140]

35. Was working full time in a stressful

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]

38. makes sense

glad your are feeling better

[yonder]

34. Yes, same here and it seems like there was always enough

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]

39. "Take this Job and Ship It" by Byron Dorgan a past senator from ND, I believe.

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]

37. I didn't do it on a minimum wage job. I did it with a part time UNION job.

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]

25. oh YA THINK???

imagine that

[democratisphere]

27. Economic intelligence.

Where the hell did this finally come from?

[shanny]

31. oh well THERE'S a News Flash!

"Research shows"? Eff me. Our overlords are pretty fucking stoopid, end of story.

[MurrayDelph]

41. I think the appropriate response

involves a Conan Doyle character and a declaration of constipation.