Inequality Is Holding Back the U.S. Economy
By Justin Lahart
When it comes to money, America has always had winners and losers, but the widening gulf between the rich and the bulk of U.S. households may be making almost everybody worse off. That includes investors. Income data released by the Census Bureau on Tuesday showed that the median U.S. household—the one in the statistical middle—had income of $63,200 last year. That was a bit more than the $62,600, adjusted for inflation, that the median household made in 2017. And it is well above the $56,750 that new data, adjusted for methodology changes, show the median household made in 2014, when many Americans were still smarting from the aftermath of the financial crisis…. But inequality may also change the way the economy works, points out Karen Petrou, who runs policy-analysis firm Federal Financial Analytics Inc. Rich people are less likely than others to spend additional income, for example, leading to reduced growth and inflation. And because the rich tend to invest that extra money instead, it can lead to increased asset prices.