The US population is increasingly better off, and increasingly unequal
Charu LahiriInvestment Manager
According to the emotively-named 'Misery Index', the US is better off today than ever before. Low inflation and low unemployment, the latter backed up by Friday’s relatively steady US jobs report data, are creating an apparently benign environment for the US population.
However, a glance at the Gini coefficient tells us that while the country may be better off on the whole, US incomes are increasingly unequal. A number of factors have led to this turn of events. The first is a relatively organic one – income inequality can naturally rise as a country reaches a certain point in its economic development. The second is a decidedly policy-made matter: the generous quantitative easing enacted by the US Federal Reserve in the wake of the 2008 financial crisis has led to a decade-long bull run in the value of many financial assets, which are primarily held by those already in the upper echelons of the income distribution curve. The third is a comparatively new issue, but one which has echoes of past technological advances: the growing presence of automation across industries is disproportionately harming the least well off.
So the US may be better off overall, but it is seemingly an increasingly unequal place to be. Issues like these, across developed nations, are unlikely to be transitory. We believe that these long-term secular trends – often masked by short-term data points – will be a driving force in political, economic and policymaker agendas into the future.