Widening income inequality hurts consumption: U.S. Fed official

Updated 2017-09-27 10:30:55 Xinhua

U.S. Federal Reserve Governor Lael Brainard on Tuesday warned that widening income and wealth inequality in the United States could dampen consumer spending.

"Persistently high levels of income and wealth inequality may also have implications for the robustness of consumer spending, which accounts for roughly two-thirds of aggregate spending in the United States," said Brainard in a research conference in Washington D.C..

She quoted research results as saying that widening income and wealth inequality may damp consumer spending in the aggregate, as the wealthiest households are likely to save a much larger proportion of any additional income they earn compared to households in lower income groups that are likely to spend a higher proportion on goods and services.

The United States is now facing widening income and wealth gap, as a latest Fed survey report shows, said the Fed official.

According to the Fed report which is due to be released Wednesday, the share of income held by the top one percent of households reached 24 percent in 2015, up from 17 percent in 1988; and the share of wealth held by the top one percent rose to 39 percent in 2016, up from 30 percent in 1989.

The Fed official also warned that disparities in employment could reduce the long-run potential of the economy.

In United States, the national unemployment rate dropped to historic low of 4.4 percent in August, while the unemployment rate for Hispanics was 5.2 percent and 7.7 percent for African Americans.

"While the policy tools available to the Federal Reserve are not well suited to addressing the barriers that contribute to persistent disparities in labor market outcomes, understanding these barriers and efforts to address them is vital in assessing maximum employment as well as potential growth," said Brainard.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58December 19 2017 04:11:22

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16December 19 2017 04:11:22

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18December 19 2017 04:11:22

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

News:
China World Business Sports Showbiz Audio
Video:
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
Photos:
China World Fun Travel Entertainment Sports
Travel:
Beijing Shanghai Guangzhou
Lifestyle:
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords