Wealth Inequality Doesn’t Show Up in Broad Economic Metrics, Masking the Fragility of Our Current System
By Reshma Kapadia
Economic inequality is not a story that can be told in the aggregate. Most economic data are averages, which means that greater inequality—more wealth in the hands of the few—mathematically masks the real economic data that reveal the fragility of our system. …But lower-income borrowers already saddled with debt can’t typically access the ultralow rates—and tend to have trouble accessing funding from banks entirely, exacerbating the inequality, says Karen Petrou, co-founder of regulatory advisory firm Federal Financial Analytics. Though aggregate Fed data suggest that most households were not highly leveraged last year, the bottom half of households held nonmortgage liabilities that were 170% of the value of the durable goods they owned—a precarious position if anything were to go wrong, Petrou says.