American Millennials: The Generation the Recovery Left Behind

By Karen Petrou

In our last blog post, we chronicled the continuing demise of the American middle class.  Now, we turn to the equality disaster evident in the most recent U.S. demographics.  A new General Accountability Office (GAO) study confirms that millennials (those aged 18-37) are rapidly losing any chance of doing better than their parents and trends are extraordinarily inauspicious for NextGen followers.  Inter-generational economic mobility was once as much a hallmark of America as its robust middle class – in 1970, 92 percent of 30-year-olds made more money in inflation-adjusted terms than their parents did at similar ages even though the 1970 economy was considerably weaker than the prewar boom.  Now, millennials are far, far behind their parents.  Looking at wealth share,* baby-boomers owned 21 percent of U.S. net wealth when they turned 35 (1990 on average). Continue reading “American Millennials: The Generation the Recovery Left Behind”

Dark Corners in “Good Places”

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””

“People’s QE” and Noblesse Oblige

By Karen Petrou

As the chimera of the post-crisis recovery fades and central bankers find themselves powerless to reverse recession, “people’s quantitative easing” is gaining attention as a tool a growing number of central bankers fancy gives them a new way to wreak their beneficent will.  People’s QE – also known more colorfully as “helicopter money” – means that, despairing of fiscal-policy remedies, central banks print money and then either just give it to the people or invest it in assets they or their bosses think best for equalizing, trade-deficit dropping, climate-restoring, or other all-to-the-good economic growth.  However, it’s not just central bankers casting longing eyes at the ability of central banks to print money – officials ranging from those in the Trump Administration to the Democratic Socialist candidate for President see it as a new way to do what they think are the voter’s bidding without raising the deficit.  This is really, really central banking, but for all its power, it’s very problematic.  QE so far has done little to spur sustained recovery and much to make the U.S. even more unequal.  There’s no reason to believe a people’s QE will be any better. Continue reading ““People’s QE” and Noblesse Oblige”

America’s Stalwart Savers Get the Sucker Punch

By Karen Petrou

Recently, I had an op-ed in the Financial Times arguing that negative rates make it even harder for moderate-income households to accumulate wealth.  The reason, I said, is simple:  when savings-deposit or similar rates are ultra-low or even negative in real terms, households that save get poorer and poorer both on their own and in comparison to wealthier households with more sophisticated financial-asset investments.  This might seem irrefutable, but the article generated hundreds of comments.  Many were positive but more than a few countered that lower-income households don’t have savings so savings rates don’t exacerbate economic inequality.  To my mind, this is like saying that poor people are already thin so the fact that they don’t have enough food doesn’t matter. Continue reading “America’s Stalwart Savers Get the Sucker Punch”

Do Credit Unions Give Credit Where Equality is Due?

By Karen Petrou

U.S. credit unions in 2019 are far from the proverbial church-basement financial clubs – now, credit unions are a $1.5 trillion sector of the U.S. financial industry.  Given the extent of the U.S. equality crisis, $1.5 trillion dedicated to affordable, sustainable financing would not only adhere to the 1934 statutory mission that binds credit unions to this day, but also make a heck of a difference for low-and-moderate income households.  Do credit unions in fact adhere to their mission and thus earn the sweeping tax and regulatory benefits taxpayers provide to encourage them to do so?  A new Federal Financial Analytics study* finds that credit unions sadly fall far short. Continue reading “Do Credit Unions Give Credit Where Equality is Due?”