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””

It’s Worse Than You Thought

By Karen Shaw Petrou and Matthew Shaw

Janet Yellen, Ben Bernanke, and Jerome Powell have each bemoaned U.S. economic inequality and then asserted that it’s everyone else’s fault.  On the blog and in our speeches, we counter that post-crisis monetary and regulatory policy had an unintended but nonetheless dramatic and destructive impact on the income and wealth divides.  In doing so, we often point to just how much worse and how much faster inequality became as post-crisis policy took hold.  Demographics, technology, and trade policy didn’t change anywhere near that much that fast.  Now, a new study from the Federal Reserve Bank of Minneapolis takes the story forward with a trove of data evaluating U.S. economic inequality from 1949 through 2016.  For all the recovery and employment the Fed cites in its equality defense, these data tell a far different tale.   Continue reading “It’s Worse Than You Thought”

One Small Step for Better Monetary-Policy Models

By Karen Shaw Petrou

When I spoke at the Federal Reserve Bank of New York on March 1, I pressed hard for less reliance on data that washes away growing U.S. economic-inequality gaps.  Happily, many at the talk readily concurred.  For those who disagree, take note: an amendment added on March 6 to a House Financial Services Committee budget statement for the first time demands that the Fed do better when it makes judgments about U.S. prosperity. Continue reading “One Small Step for Better Monetary-Policy Models”