By Karen Petrou
- Distributional data show clearly that, fiscal stimulus notwithstanding, the U.S. was still more economically unequal in 2020.
- Only fiscal policy once combined also with progressive financial policy will put the inequality engine into reverse.
As we have noted before, the Fed’s new Distributional Financial Accounts of the United States (DFA) is a definitive source of economic-equality data we hope the Fed will not just compile, but also use for policy-making purposes. The latest edition of the DFA demonstrates yet again why distributional data are so compelling, showing now the profound challenge even unprecedented fiscal policy on its own faces slowing down the inexorable engine of inequality. Still more fiscal stimulus in 2021 will boost absolute income and wealth numbers a bit at some benefit to low-, moderate-, and even middle-income households. Still, the upward march of financial markets powered in large part by Fed policy inexorably widens the inequality gap. No matter the “crust of bread and such” from fiscal programs, inequality still increases the slow pace of economic growth, the risk of financial crises, and the odds that the electorate will be even angrier in 2024 than 2020.
Continue reading “Fiscal Policy’s Futile Equality Expectation on Its Own”
By Matthew Shaw
Absent geopolitical or market surprises, the current U.S. expansion will by summer be the longest consecutive period of economic growth on record. That’s the good news. The toxic side-effect of all this prosperity: how little of it is equitably shared and how angry that makes the majority of Americans ahead of the next election. If income and wealth growth over the 2016-2019 period tracks 2010 to 2016, then the middle class will be no better off in 2019 than 2001 even with almost a decade of aggregate growth. Continue reading “A Paradox: U.S. Growth and Who Got Left Behind”
By Karen Petrou
On February 13, bipartisan Senate Banking leadership asked for views on how best to craft a new consumer-data privacy and security framework. Reflecting 2017’s Equifax debacle, the inquiry seems rooted in the credit-reporting framework. Essential though it is, data-integrity fixes for the credit bureaus aren’t anywhere near sufficient protection now that consumer financial data are increasingly clutched in the hands of Facebook, Amazon, Google, and an array of lightly- or un-regulated technology-based consumer-finance providers. As we have demonstrated, sustainable, sound, and fair consumer credit is critical to economic equality. Continue reading “Hard Questions on Data Privacy”
By Federal Financial Analytics
FedFin has just released a new policy paper laying out how emerging risks in unregulated tech-based financial products may threaten U.S. economic inequality. It’s not that regulated institutions have always done that much better, but rather that the power of big data, predictive modeling, and far-flung commercial interests combines with tech-firm culture in still more dangerous ways far outside the reach of effective controls or meaningful enforcement. Continue reading “Making “Responsible Innovation” a Reality: Big Tech, Small Money, and U.S. Economic Equality”