Weekly Updates
Weekly Updates
- One famous line of the slam poet former US Defence Secretary Rumsfeld is “There are known unknowns… there are things we know we don’t know.” The known unknowns are a growing problem for economists, especially around income inequality.
- We know lower income families have suffered from inflation. We don’t know how much. Inflation is a plutocratic statistic (more importance is given to the spending patterns of higher income families). Lower income families face higher inflation than average. Profit-led inflation is likely to fall harder on lower income families, who also benefit less from disinflation and deflation for consumer durable goods.
- We know the labor market has changed a lot. We don’t know if lower income groups are better off. There has been a lot of job hopping (the labor market has churned more than it has tightened). But that turnover does not necessarily mean job security for lower income workers.
- We know savings have fallen and bank lending standards have tightened. We don’t know how big a problem this is for lower income groups. The shadows of the data suggest lower income groups will be hurt more by credit tightening. We know inequality is likely to rise. We do not know how bad inequality might get.
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