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Income Inequality and the Economy: The Impact on Workers and Consumers Public Affairs Forum Date: September 13, 2017 Presented by: Steven Fazzari Bert A. and Jeanette L. Lynch Distinguished Professor of Economics at Washington University

SLIDE 1

Date: Presented by:

Income Inequality and the Economy: The Impact on Workers and Consumers

Public Affairs Forum

Steven Fazzari Bert A. and Jeanette L. Lynch Distinguished Professor of Economics at Washington University

September 13, 2017

SLIDE 2

Recent Stagnation Historical Comparison of Business Cycles

(Peak-to-peak growth of real GDP per capita) Peak Dates Total Growth (per capita) Growth per Year (per capita) 1973:4 to 1979:3

11.9%

1.8%

1979:3 to 1990:2

25.0%

2.1%

1990:2 to 2000:2

24.2%

2.2%

2000:4 to 2007:4

10.9%

1.4%

2007:4 to 2017:2*

5.6%

0.6%

*Final cycle is incomplete

SLIDE 3

Household Debt to After-Tax Income

(Standard and Adjusted Measure based on Cynamon-Fazzari Review of Income & Wealth, 2015)

0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

Adjusted Debt to Income Ratio Standard Debt to Income Ratio

SLIDE 4

Weak Household Spending and the Stagnant Recovery

(Based on Cynamon-Fazzari Review of Income & Wealth, 2015)

80.0 85.0 90.0 95.0 100.0 105.0 110.0 115.0 120.0 125.0 130.0 1 2 3 4 5 6 7 8 9 10 11 12

Index Peak=100 Years Since Peak

Real Household Demand Profiles (Population Adjusted)

1978-1989 1989-2000 2000-2006 2006-2015

SLIDE 5

Date: Presented by:

Income Inequality and the Economy: The Impact on Workers and Consumers

Public Affairs Forum

Steven Fazzari Bert A. and Jeanette L. Lynch Distinguished Professor of Economics at Washington University