The issue of whether US inequality has climbed since the recession of 2008 has been relitigated this week. A short analysis by Stephen Rose claimed that income inequality had actually fallen, assigning the credit to public policy.
David Leonhardt of the New York Times discussed Rose’s findings, followed by further analyses and critiques from Ben Walsh and Nick Bunker. I’ll present the findings first before adding my own thoughts at the end. Read more
Split in half the six years from the start of the US recession at the end of 2007 through the end of last year, and consider them as a pair of three-year periods.
In the first period — from 2007 through 2010, and which we’ll refer to as the crisis years — wealth inequality in the US spiked while income inequality actually contracted quite aggressively, the latter a reversal of the pre-recession trend. “Crisis years” isn’t a perfect label, as the recession actually ended in mid-2009, but it’s good enough for our purposes here. Read more
The US Census Bureau has just released its latest data on median incomes by state, which can be found here in table H-8. We looked at these data and would like to share a few interesting charts.
First, look at the gap between the states with the highest and lowest median incomes. Read more
Included in CEA chair Jason Furman’s thoughtful speech on inequality was this assessment of US tax policy in the past five years:
Since 2009 the United States has made three sets of permanent (or semi-permanent) changes to its tax code relative to the policies that were previously in effect:
For all the gnashing and wailing about the dangers of quantitative easing from some of the super rich, the fact remains that owners of capital (ie the rich) have done very well from QE.
Now, as we’ve noted before, plenty of serious people are paying attention to the inequality question, and its not clear what monetary policy can do about inequality even if it should do something about it. But news that US housing is turning frothy again, with San Francisco prices up 25 per cent over the last year, has Albert Edwards of Societe Generale reaching for the exclamation marks. Read more
Here’s a rather incurious column by Andrew Ross Sorkin in Dealbook. One which jumps from JPMorgan feeling the heat over Chinese princelings and the US Foreign Corrupt Practices Act (serious stuff) to Wall Street executives hiring the progeny of other Wall Street executives.
Sorkin’s for it — rather fatalistically.
But, in truth, it is the way of the world. It is a hard to fault a business for hiring someone who has better contacts than someone else.
We couldn’t manage to squeeze these charts from Edward Wolff’s paper into our earlier already-novel-length post about monetary policy and US inequality (click to enlarge each). Read more
And the annual report from the St Louis Fed found that 62 per cent of the wealth recovery through the end of last year has been the result of rising stock markets — and stock ownership is concentrated among richer households.
Economix has a very good summary, and we also recommend last year’s paper by Edward Wolff, in which you’ll find this chart (click to enlarge): Read more