By Karen Petrou
By Karen Petrou
Ever since the U.S. economy crept out of recession, the Fed has represented its slow, inequitable recovery as a “good place.” Its own 2018 economic well-being survey contradicted this and the latest data released on May 14 are no better before COVID came and a lot worse thereafter. These data make it still more clear that the Fed must quickly reorient its trickle-down rescues to move money starting at ground level, but even that won’t be sufficient given the magnitude of COVID’s economic impact. The combination of macroeconomic harm and financial-system hurt also requires a reset in which new public guarantees for prudent private financing fully recognized by new rules play a major part. Continue reading “Bad Things about the Good Place and How to Pretty It Back Up”
By Karen Petrou
As the COVID crisis continues, some have speculated that wealth inequality will drop because it did in the 1400s during the Black Death. However, this cure is not only of course considerably worse than the disease, but it’s also no cure. Economic inequality is a cumulative process – the worse off you are, the worse off you get unless something positive reverses this compound effect. Conversely, the better off, the still more comfortable unless something comes along to redistribute your gains, however well or ill gotten. Given how unequal the U.S. was before COVID, it will surely get only more so now, especially if the Fed stays the course with trillions for financial markets and pennies for everyone else. Continue reading “Inequality Rising”
By Karen Petrou
As I write this, thousands of small businesses are clamoring for urgent SBA loans and so many Americans are filing for unemployment insurance that systems have crumpled across the country. At the same time, the S&P rose over three percent since Monday’s open. The reason for this dissonance lies in the fact that key parts of the financial market have been bailed out while ordinary borrowers are stuck and then some. Saving markets won’t salvage the economy – at its root, the U.S. is a consumption-driven economy. If consumers can’t survive, neither will the economy. The Fed must add a Family Financial Facility to all those it has crafted for the financial market and it should open one fast. In this crisis, time is truly money and money is what most families don’t have.
By Karen Petrou and Matthew Shaw
Yesterday, FRB Vice Chairman Clarida said that the U.S. economy is in “in a good place.” However, The Fed’s new study of American economic “well-being” shows that huge swaths of the United States are struggling harder than ever before to make ends meet. All but the most affluent Americans asked about how well they’re doing don’t feel anywhere near that good about it. Combine this with new data on the evaporating American middle class and an ugly picture quickly merges. In it, the prosperity in which the Fed takes such comfort rests thinly atop millions – indeed a hundred plus million – of Americans who are barely getting by at the height of the business cycle following a record-breaking “recovery.” No wonder that so many Americans remain so angry about their economic prospects and why political polarization is sure to define the 2020 election at least as much as it determined 2016’s outcome.
Continue reading “The Good, the Bad, and the Ugly in American Well-Being”
