(Bloomberg) — The coronavirus pandemic is worsening U.S. inequality along income and racial lines, Federal Reserve Bank of Philadelphia President Patrick Harker said.
“This health crisis has not so much changed things as simply exposed, and in some cases accelerated, trends that were already present in our society,” Harker said Thursday in remarks prepared for a virtual event. “The United States went into this crisis a troublingly unequal place, beset by serious inequities in income, wealth, and opportunity.”
The Philadelphia Fed chief cited Census Bureau statistics showing U.S. income inequality in 2018 reached the highest levels in 50 years of data, as well as a St. Louis Fed study indicating that, as of 2016, the top 10% of American households controlled 77% of the nation’s wealth. He added that researchers at his own bank had found that lockdowns implemented to stop the spread of the virus had disproportionately hit employment in low-income neighborhoods and families.
“American inequality is a moral and ethical challenge to our country’s founding creed. But research shows it’s also a growing economic problem,” said Harker, who votes on the rate-setting Federal Open Market Committee this year.
“That makes sense, of course: Those who earn less money are likely to spend it, whereas high earners save,” he said. “That’s crucial because consumer spending accounts for about 70% of our country’s total GDP. Ensuring an equitable recovery from Covid-19 is critical in making sure the next expansion is not only fair but also strong and durable.”
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