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Sat May 25, 2013, 11:07 PM

"Sarah Bloom Raskin: Inequality May Hurt Economic Growth"

Sarah Bloom Raskin: Inequality May Hurt Economic Growth



Overall wage growth has been anemic, and many households have not seen their circumstances improve materially,” Raskin said of the current economic recovery, which began in 2009 after the so-called “Great Recession” officially ended.

The Fed thus far has focused on stimulating overall growth by keeping borrowing costs near record-lows and incentivizing investors, businesses and households to take risks, in hopes it will lead to increased purchases and investment. Fed policy tools such as lowering interest rates and purchasing U.S. Treasuries and mortgage securities, however, may be ineffective in alleviating inequality.

Raskin's comments, similar to previous speeches she delivered on inequality in March and April, may signal a growing concern within the Fed over rising wealth and income disparities. Raskin has previously said that the Fed should study how income and wealth inequality may impact monetary policy.

Between 1979 and 2007, inflation-adjusted, pretax income for households in the top 1 percent more than doubled, while middle-income households experienced earnings growth of less than 20 percent, according to Congressional Budget Office data. A recent survey by the Fed found that households in the top fifth of annual income owned 72 percent of the total wealth in the economy in 2010, while those in the bottom fifth owned just 3 percent.


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