How the Other Half Goes Broke

By Karen Shaw Petrou and Matthew Shaw

In our last blog post, we laid out the most telling inequality-data points from an important new study from the Federal Reserve Bank of Minneapolis which for the first time runs from 1949 to 2016 and adds many critical equality measures.  These data show more decisively than ever not only that wealth inequality in 2016 is the worst since at least the Second World War, but also that this is due to who holds the assets that have gained the most.  Since which assets return how much is due now in large part to post-crisis monetary and regulatory policy rather than to market forces and broader macroeconomic trends, it’s post-crisis policy – not forces from beyond – that increasingly dictates U.S. economic equality. Continue reading “How the Other Half Goes Broke”

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”

The Mysterious Case of the Misfiring Monetary Policy

By Karen Shaw Petrou

When former Fed Chairman Bernanke launched a new approach to U.S. monetary policy earlier this year, he prompted many within and outside the U.S. central bank to call for sweeping change that would solve the “mystery” Janet Yellen says bedevils post-crisis monetary-policy transmission.  Just like the blue carbuncle Sherlock Holmes eventually found inside a large goose, central bankers are searching for a new gemstone within reams of data by which to guide increasingly complex policy-transmission channels.  Continue reading “The Mysterious Case of the Misfiring Monetary Policy”

The Morass That Swallowed the Middle Class

By Matthew Shaw

While much of the inequality debate focuses on the gains of “the 1%,” less attention has been paid to the economic well-being of what is broadly termed the middle class, which is all too often just lumped into the other “99%.”  However, focusing the debate on only the 1% obscures important trends within each of these groups, including that there is ample evidence that the gains of the 1% are largely driven by the wealthiest among this already-elite group along with diminishing prospects for the rest of us.  Today, we look at one of these groups with diminishing prospects and a concerning trend recently highlighted by IMF staff: the “hollowing out” of the U.S. middle class.  Continue reading “The Morass That Swallowed the Middle Class”

Is America Really Richer?

By Karen Shaw Petrou and Matthew Shaw

On September 21, the Federal Reserve released its quarterly study of American’s net worth.  As with the Fed’s earlier study on U.S. economic happiness, the release trumpeted the good news revealed in the latest aggregate data.  For net worth, this means a new record in the second quarter, with national household net worth hitting an unprecedented $96.2 trillion.  But, the Fed’s data do not go farther to show which Americans own how much of this giant sum.  We do.
Continue reading “Is America Really Richer?”