S&P: Wealth gap is slowing US economic growth

[Omaha Steve]

http://apnews.excite.com/article/20140805/us--wealth_gap-us_economy-b6c5de2c2f.html

By JOSH BOAK

WASHINGTON (AP) — Economists have long argued that a rising wealth gap has complicated the U.S. rebound from the Great Recession.

Now, an analysis by the rating agency Standard & Poor's lends its weight to the argument: The widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles and slowed the 5-year-old recovery from the recession.

Economic disparities appear to be reaching extremes that "need to be watched because they're damaging to growth," said Beth Ann Bovino, chief U.S. economist at S&P.

The rising concentration of income among the top 1 percent of earners has contributed to S&P's cutting its growth estimates for the economy. In part because of the disparity, it estimates that the economy will grow at a 2.5 percent annual pace in the next decade, down from a forecast five years ago of a 2.8 percent rate.



FILE - In this March 29, 2013, file photo, a homeless man pushes a shopping cart full of his belongings across an intersection in the Skid Row area of Los Angeles. Economists have long argued that rising economic inequality has held back the U.S. rebound from the Great Recession. Now, an analysis by the ratings agency Standard & Poor{2019}s confirms it: The widening gap between the wealthiest Americans and everyone else has made the economy more prone to boom-bust cycles and held back the rebound from the Great Recession. (AP Photo/Jae C. Hong, File)


FULL story at link.

[Laelth]

1. k&r for the truth, however depressing it may be. n/t

-Laelth

[jwirr]

2. Couple the wealth gap with the rethugs who do not fund housing programs, safety net etc. and

it is no wonder the economy is faltering.

We live in a house that needs remodeling desperately. There is not a room that does not need fixing in some way and we could use weatherization also. But those programs run out of money so fast it is not funny.

Nothing will get better unless we start funding programs like these.

[progressoid]

3. No shit.

But....CLASS WAR!!@!2

[HomerRamone]

4. So the wealth gap is important because it's slowing the growth of the rich people's wealth, too.

And if it didn't it would be OK

[lunasun]

5. +1

[Sherman A1]

13. +1

to Your +1 which figuring the way the economy has been handled probably comes to a cumulative .000025 or something like that.

[TygrBright]

6. Love it when S&P raid the "No shit, Sherlock!" article file... n/t

[pansypoo53219]

7. GREED IS BAD. taxes = civilization. tinkle down is NOT WORKING and never did.

[Yo_Mama_Been_Loggin]

9. Tinkle on.

[Yo_Mama_Been_Loggin]

8. Nothing another tax cut for the top 1% wouldn't fix

[DonCoquixote]

10. when even S & P sees 2+2=4

Then we KNOW we have hit the wall at high speed, or rather, jumped the shark.

[Qutzupalotl]

11. Money not spent or invested is essentially taken out of the system.

Although money is fungible, there is always a finite amount at any given time. When enormous chunks are taken out of circulation — held in private accounts — there remains less for the average person to access. Personal spending drives the economy, far more than investments, startups, or interest on savings, by sheer virtue of scale. 100 million people spending $10 will do more for the economy than anything one billionaire could do, and they will distribute the benefits more effectively.

[elzenmahn]

12. dja THINK?

Why would the Conservatives in this country, Repub and Dem (unfortunately) support the Middle Class as an institution, when they know damned well that the same Middle Class won't support them? They know that Economic Power = Political Power, so why would conservatives support an institution that empowers those that would largely be against them? One can't expect it...

Remember how the Great American Middle Class came to be? The New Deal, GI Bill, infrastructure spending like what created the Interstate Highway System, and a multitude of other initiatives all came about because of LIBERALS - and the voters from WWII through 1980 knew it.

[DallasNE]

14. Even S&P Is Saying That Trickle Down Is A Failure. n/t

[liberal from boston]

15. Lawrence O'Donnell Rewrite on Income Inequality.

Great Rewrite of Standard & Poor report on Income inequality:


http://www.rawstory.com/rs/2014/08/06/lawrence-odonnell-wall-street-figured-out-that-income-inequality-is-bad-for-wall-street/

[JDPriestly]

16. K&R.

This is why I back Elizabeth Warren. With her proposals, her expertise on bankruptcy law and why families become bankruptcy, she is more likely than Hillary to deal with the issue this issue.

Income inequality and the terrible struggle it means for minimum wage and even middle class people like small business owners is the cause of every problem from our crumbling infrastructure to our failing education. The 1%ers don't care about it unless they can find a way to take a cut on the repairs. They just want low taxes so that they can accumulate more money.

Meanwhile, the unrecognized reality is that our money declines in worth as our infrastructure disintegrates.

Families that are struggling economically do not have the emotional or financial wherewithal to provide good pre-school care for their children. Those early years are when the child's brain sets its pace. When families are falling apart because they can't pay their bills, the children don't get the sensory and intellectual stimulation they need to focus well in school. (There are exceptions but not many.)

[elleng]

17. This is important,

and hopeful, if only other 'movers and shakers' would follow S&P (in spite of its huge failures to be truthful in the past.)

[Hortensis]

18. Hardly new news, but hopefully more awareness and more weight to bring to bear.

Of note from the report, "Harvard professors Claudia Goldin and Lawrence Katz argue that, rather than technology picking up speed, the reduced supply of educated workers is the key factor explaining the education gap, finding that between 1980 and 2005 the pace of the increase in educational attainment slowed dramatically. In 1980, Americans age 30 years or older had 4.7 years more schooling on average than Americans in 1930--but Americans in 2005 had only 0.8 years more schooling on average than Americans in 1980 (24). Based on this data, it would appear the problem isn't that technology has leaped ahead--rather, the supply of educated workers has stalled."

I note that the 1980-2005 "dramatic" slowing of increased educational level corresponds strongly with the rise in conservatism and fundamentalist evangelical religion, politically the "Reagan Revolution," of that same time period.

BTW, if the report's ending was intended as a simple, catchy little phrase to encourage TV news to pick it up, it worked. Googling finds all networks reporting this. "A rising tide lifts all boats…but a lifeboat carrying a few, surrounded by many treading water, risks capsizing."

[whereisjustice]

19. I trust heir apparent Hillary Clinton will raise the issue at her next $250,000 speaking engagement

with Goldman Sachs.