The Fed governor said it was “concerning” that the share of total national income going to wage earners has been in a long-term decline. (Photo: Shutterstock)
(Bloomberg) –The long-term vigor of the U.S. economy may be at risk as middle class households are squeezed by slow growth in income and wealth and rising costs for housing, health care and education, Federal Reserve Governor Lael Brainard said.
“An economy that delivers an increasing share of income gains to high-wealth households could result in less growth in consumer demand than one in which the gains are distributed more equally,” she said Friday at a Fed community development conference in Washington.
Research shows that households with lower levels of wealth spend a larger fraction of any income gains than their wealthier counterparts. That has long-term implications for consumption, the single biggest engine of growth in the economy, she said.
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