By Karen Petrou and Matthew Shaw
Shortly before Thanksgiving, a new study documented that U.S. life expectancy since 2010 has taken a sharp turn for the worse for younger Americans regardless of race, gender, or education. We knew that opioids were devastating, but this study confirmed others showing also that the overall reversal in U.S. life expectancy is due to more profound and mysterious afflictions. Doctors are flummoxed by why U.S. mortality is so much higher than that in other advanced countries, where life expectancy continues to increase for younger citizens, concluding that something endemic is going on behind the epidemic of “diseases of despair.” The latest inequality data demonstrate yet again that the economic “good place” that comforts Fed policy-makers is to be found only in the 100th floor penthouses that are the eyries of the one percent. We thought the data more than dispiriting when we analyzed the Fed’s first distributional financial account; now, we find them devastating, not to mention evil omens of a polarized, angry electorate heading to the 2020 polls. Continue reading “Dark Corners in “Good Places””
By Matthew Shaw
While much of the inequality debate focuses on the gains of “the 1%,” less attention has been paid to the economic well-being of what is broadly termed the middle class, which is all too often just lumped into the other “99%.” However, focusing the debate on only the 1% obscures important trends within each of these groups, including that there is ample evidence that the gains of the 1% are largely driven by the wealthiest among this already-elite group along with diminishing prospects for the rest of us. Today, we look at one of these groups with diminishing prospects and a concerning trend recently highlighted by IMF staff: the “hollowing out” of the U.S. middle class. Continue reading “The Morass That Swallowed the Middle Class”
By Karen Shaw Petrou
In our post on the inequality impact of quantitative easing, we said that QE-driven asset valuations not only favor the rich, but in concert with ultra-low rates also sows the seeds for the type of asset-bubble that all too often leads to crashes and thus still more macroeconomic misery and inequality. A new staff paper from the Federal Reserve Bank of San Francisco finds that, even if the asset-price bubble doesn’t burst, inequality on its own could stoke the next U.S. financial crisis, with heightened inequality also found to be the best crisis predictor of all the other, more typical measures that the paper surveys.
Continue reading “Another Reason to Avoid Economic Inequality: Increased Financial-Crisis Risk”