By Karen Petrou
On January 22, Rep. Carolyn Maloney (D-NY) and 18 senior House Democrats reintroduced legislation (now H.R. 707) requiring federal statisticians to provide an equality-focused insight into the gross domestic product (GDP) number all too often considered the arbiter of American prosperity. Senate Minority Leader Schumer (D-NY) and Sen. Martin Heinrich (D-NM) introduced the same bill last year and are sure to do it again and, then to join Maloney in pressing for action. This time, it will come quickly in the House and may well pass the Senate in this Congress. Would it make an equality difference? No, but at least we’d know more clearly how much trouble we’re in.
Continue reading “Gross Domestic Product and U.S. Inequality”
By Matthew Shaw and Drake Palmer
Recent jobs data sparked excitement as news reports talked of how America is finally going back to work. This is understandable optimism, based as it was on a concurrent rise in labor-force participation and a drop in the government’s preferred measure of unemployment. Here, we assess whether the Fed’s “solid” and “very well performing” economy has finally allowed low-and-moderate income (LMI) households to share the prosperity rapidly pooling at the very top of the income and wealth distribution. In short, and sad to say, it isn’t – hourly pay for low-wage/low-skill workers has declined in real (i.e., inflation-adjusted) terms over the past four decades and is essentially flat since 2010. As we noted in our last blog post, wealth concentration has soared since the financial crisis. Even if a corner has now been turned for everyone else, it’s just a very tight one at the bottom of the equality canyon. Continue reading “Hard Work, Low Pay, High Costs: Life on the Ground in a “Well-Performing” Economy”
By Karen Shaw Petrou and Basil N. Petrou
On June 20, FRB Chairman Powell said, “Nine years into an expansion that has sometimes proceeded slowly, the U.S. economy is performing very well.” Although Mr. Powell noted low labor participation, puzzling inflation, and problematic wage growth, he said that all will come right as long as the Fed stays the course. No mention was made of unprecedented U.S. income and wealth inequality or of a housing market serving mostly the oldest, wealthiest, and most coastal among us. Too bad – inequality and the impediments to effective monetary-policy transmission it erects are among the most important reasons that the nine years Mr. Powell cites have seen the slowest recovery in decades in concert with new threats to financial stability. Continue reading “Disquiet on the Home Front”
By Karen Shaw Petrou
Although the Federal Reserve resolutely rebuffs suggestions – mine included – that it’s exacerbated U.S. economic inequality, the Bank of England has been forced by public outcry to deal directly with its own inequality impact. Reacting to strong public protest and withering fire from the Prime Minister, the BoE recently released not only a report denying the charges itself, but now also an exculpatory speech by Andrew Haldane, its influential chief economist. Clearly feeling the heat, the Bank of England has even come up with a way to sell its positive message: personalized “scorecards” proving to the skeptical citizenry that it’s better off than personal economic problems might lead it to believe. Continue reading “Baseball Cards for the Equality Game?”
By Karen Shaw Petrou
- CCAR now tries to make big banks a shadow U.S. central bank.
- Result: more systemic risk and still less economic inequality.
How do you make the financial system less stable and increase U.S. economic inequality at the same time? It’s not easy, but if you’re the Fed, then you accomplish this frightening feat by toughening up the annual CCAR stress test for the biggest banks without an eye to its systemic or market impact. Stress testing is fine – indeed an important addition to the post-crisis supervisory arsenal. But, CCAR itself is founded on two flawed premises: big BHCs are the heart of financial stability and nothing the central banks does adversely affects economic inequality. Continue reading “Caught in CCAR’s Cross-Fire”