Policymakers and the media are paying too much attention to how quickly the US economy will emerge from the pandemic-induced recession, and not nearly enough to the nation’s deeper structural problem – the huge imbalance of wealth that could enfeeble the economy for years.
Seventy per cent of the US economy depends on consumer spending. But wealthy people, who now own more of the economy than at any time since the 1920s, spend only a small percentage of their incomes. Lower-income people, who were in trouble even before the pandemic, spend whatever they have – which has become very little.
In a very practical sense, then, the US economy depends on the spending of most Americans who don’t have much to spend. That spells trouble ahead.
It’s not simply a matter of an adequate “stimulus”. The $2,000 checks contained in the American Rescue Plan have already been distributed and extra unemployment benefits will soon expire. Consumer spending will…