Homepage
PR Newswire
27-10-2014, 09:03 PM
http://online.wsj.com/articles/feds-yell...1413549684
Janet Yellen Decries Widening Income Inequality
Central Bank Chief Says Wealth Disparity Could Be Impeding Economic Mobility
Federal Reserve Chairwoman Janet Yellen speaks during a visit with a coalition that provides employment services in Chelsea, Mass., on Thursday. MICHAEL DWYER/ASSOCIATED PRESS
By PEDRO NICOLACI DA COSTA
Updated Oct. 17, 2014 7:22 p.m. ET
677 COMMENTS
BOSTON—Federal Reserve Chairwoman Janet Yellen said rising inequality of wealth and income in the U.S. was impeding the economic mobility at the heart of American values.
“The extent and continuing increase in inequality in the United States greatly concern me,” Ms. Yellen said to a conference on economic opportunity and inequality sponsored by the Federal Reserve Bank of Boston. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
RELATED
Fed Chairwoman Yellen Inquires About How the Unemployed Find Jobs
5 Quotes From Yellen on Income and Wealth Inequality
She noted that the disparity in wealth and income in the U.S. has grown wider for several decades, pausing during the recession and resuming its rise during the recovery as the stock market rebounded but the job market remained weak.
In addition, recent gains in home prices haven’t “fully restored the housing wealth lost by the large majority of households for which it is their primary asset,” she said.
The lower half of U.S. households ranked by wealth held just 1% of total wealth last year, down from 3% in 1989, Ms. Yellen said.
“The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” she said.
Ms. Yellen didn’t address Fed critics’ arguments that the central banks’ bond buys and zero-interest-rate policies have contributed to inequality by bolstering prices of assets such as stocks, which are primarily held by wealthier Americans.
The Fed counters its policies are aimed at boosting the overall economy, and thus helps lower-income Americans who are more likely to have high levels of debt.
Ms. Yellen didn’t address two topics more typical of a Fed chief’s speech, the outlook for the U.S. economy or interest rates. It marked her first speech as chairwoman focused exclusively on inequality.
“I think she broke new ground in terms of a Fed chair looking at such a serious socioeconomic issue with that degree of rigor,” said Karim Basta, chief economist at III Associates, an investment adviser, who attended the conference.
Inequality has generated increasing discussion since the financial crisis and recession. The Occupy Wall Street movement highlighted the issue in 2011, and it gained renewed attention this year with debates over economist Thomas Piketty’s best-selling book, “Capital in the Twenty-First Century.”
Write to Pedro Nicolaci da Costa at pedro.dacosta@wsj.com
Janet Yellen Decries Widening Income Inequality
Central Bank Chief Says Wealth Disparity Could Be Impeding Economic Mobility
Federal Reserve Chairwoman Janet Yellen speaks during a visit with a coalition that provides employment services in Chelsea, Mass., on Thursday. MICHAEL DWYER/ASSOCIATED PRESS
By PEDRO NICOLACI DA COSTA
Updated Oct. 17, 2014 7:22 p.m. ET
677 COMMENTS
BOSTON—Federal Reserve Chairwoman Janet Yellen said rising inequality of wealth and income in the U.S. was impeding the economic mobility at the heart of American values.
“The extent and continuing increase in inequality in the United States greatly concern me,” Ms. Yellen said to a conference on economic opportunity and inequality sponsored by the Federal Reserve Bank of Boston. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
RELATED
Fed Chairwoman Yellen Inquires About How the Unemployed Find Jobs
5 Quotes From Yellen on Income and Wealth Inequality
She noted that the disparity in wealth and income in the U.S. has grown wider for several decades, pausing during the recession and resuming its rise during the recovery as the stock market rebounded but the job market remained weak.
In addition, recent gains in home prices haven’t “fully restored the housing wealth lost by the large majority of households for which it is their primary asset,” she said.
The lower half of U.S. households ranked by wealth held just 1% of total wealth last year, down from 3% in 1989, Ms. Yellen said.
“The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority,” she said.
Ms. Yellen didn’t address Fed critics’ arguments that the central banks’ bond buys and zero-interest-rate policies have contributed to inequality by bolstering prices of assets such as stocks, which are primarily held by wealthier Americans.
The Fed counters its policies are aimed at boosting the overall economy, and thus helps lower-income Americans who are more likely to have high levels of debt.
Ms. Yellen didn’t address two topics more typical of a Fed chief’s speech, the outlook for the U.S. economy or interest rates. It marked her first speech as chairwoman focused exclusively on inequality.
“I think she broke new ground in terms of a Fed chair looking at such a serious socioeconomic issue with that degree of rigor,” said Karim Basta, chief economist at III Associates, an investment adviser, who attended the conference.
Inequality has generated increasing discussion since the financial crisis and recession. The Occupy Wall Street movement highlighted the issue in 2011, and it gained renewed attention this year with debates over economist Thomas Piketty’s best-selling book, “Capital in the Twenty-First Century.”
Write to Pedro Nicolaci da Costa at pedro.dacosta@wsj.com