Wednesday, December 18, 2013

Economists Agree: US Inequality Is Killing the Economy

'The economic populists are right'

Jon Queally

In this Wednesday, Nov. 20, 2013, file photo, a destitute man sleeps on the sidewalk under a holiday window at Blanc de Chine, in New York The growing gap between the richest Americans and everyone else isn’t bad just for individuals it’s hurting the U.S. economy says a majority of more than three dozen economists surveyed in December 2013 by The Associated Press. (AP Photo/Mark Lennihan, File)A majority of "private, corporate and academic economists" agree: economic inequality in the U.S. is not just hurting individuals and families who struggle to make ends meet; the growing gap in both wages and wealth is harming the economy as a whole.

That's according to a new survey by the Associated Press which confirms what progressive-minded economists and policy-makers have been saying since... always.

After asking more than three dozen economists a host of questions about trends in the current economy, the survey discovered that one of the chief concerns shared by most is the stagnation of the middle class as the rich get richer. Why? According to what AP gleaned from economists:
Higher pay and outsize stock market gains are flowing mainly to affluent Americans. Yet these households spend less of their money than do low- and middle-income consumers who make up most of the population but whose pay is barely rising.
"What you want is a broader spending base," says Scott Brown, chief economist at Raymond James, a financial advisory firm. "You want more people spending money."
Spending by wealthier Americans, given the weight of their dollars, does help drive the economy. But analysts say the economy would be better able to sustain its growth if the riches were more evenly dispersed.
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