Jerome Powell's ironic legacy on economic inequality
If there's anyone who should be talking about economic inequality it's Jerome Powell, a man who as Fed chair has aimed a spotlight on the issue and put the Fed on an intentional trajectory toward reducing it through policy.
Yes, but: Pressed for answers on how the central bank's policies have impacted wealth and income inequality among Americans during last week's virtual meeting with the National Association for Business Economics, Powell dodged and downplayed.
What we're hearing: Powell came off as "disingenuous," says Peter Atwater, an economics lecturer at William & Mary who first warned of a "K-shaped" recovery in June.
Between the lines: "What he was basically saying was, 'The broad structural problem isn’t about monetary policy. Full stop.' He didn’t go to the next point, which is, 'Are you, given that structure, reinforcing [the problem]?'" Vincent Reinhart, a 20-year Fed staffer who is now chief economist at Mellon, tells Axios.
By the numbers: Employment is just 1% lower for U.S. top earners than its pre-pandemic levels, compared to nearly 20% lower for those making less than $20 an hour, according to analysis by economics professor John Friedman.
The big picture: While market participants view him as a hero, the widening wealth and income gap of 2020 will likely be Powell's legacy among most Americans — and it's the opposite of what he's worked for.
Under his leadership the Fed has leaned headfirst into previously verboten topics like racism and sexism as well, evidenced most recently by regional presidents Raphael Bostic, Neel Kashkari and Eric Rosengren presiding over the Minneapolis Fed's "Racism and the economy" event on Wednesday.
The bottom line: Yet so far when challenged about what the Fed can do so that the next crisis does not result in a windfall for the wealthy and more pain for the poor, the Fed chair hasn't had much to say.
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