http://www.cnbc.com/id/102096839
This article states that, although unemployment is decreasing, income inequality is rising. Yellen expresses concerns over "both the growing burden of student debt and the decline in new business formation." Basically, while more and more people have higher costs of education, and thus debt because of it, fewer of the jobs becoming available have wages high enough for them to pay off this debt.
Yellen also discusses housing prices and how they have effected this inequality; she does concede that "rebounding home prices have restored some of the lost housing wealth." However, she expresses that while this helps ease "those at the bottom," it does not help much with the fact that the top 5 percent control two thirds of the nations assets.
The article goes on to discuss the effects that the Fed has had on this inequality, positive or negative (with critics and supporters arguing each side). All in all, while the economy appears to be getting better, and for the nation as a whole probably is, this may or may not help individuals who aren't in the top 5 percent.
It is interesting to see that while the Fed has improved unemployment, high income inequality and low interest rates have persisted. I think it is unrealistic to expect the Fed to have the capability to fix all of these problems at once. I think the Fed will always face a tradeoff between fixing one problem, like unemployment, while ignoring another, like interest rates.
ReplyDeleteIncome inequality is one issue that has really not improved in recent years. I agree that increasing student debts have contributed to the problem. Although college degrees usually lead to a higher income, higher student loan payments do not allow for much spending on rent and other necessities. This forces many recent graduates to live at home until they can afford living on their own. I think this is an issue that should definitely be addressed.
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