Low Interest Rates Limit Fed’s Ability to Fight Next Recession, Powell Says
Fiscal stimulus would be key part of crisis management toolkit, he added
Federal Reserve Chairman Jerome Powell said in prepared remarks on Feb. 11 that persistently low interest rates limit central banks’ scope to respond to an economic downturn, adding that using fiscal policy is key for helping to stabilize the economy when it weakens.
“This low-interest-rate environment may limit the ability of central banks to reduce policy interest rates enough to support the economy during a downturn,” Powell said in testimony prepared for a House Financial Services Committee hearing on Feb. 11.
The head of the nation’s central bank called for restraint in federal spending in times of boom to make room for increased expenditures when the economy finally does contract.
Report: California’s Middle-Class Wages Rise by 1 Percent in 40 Years
Middle-class wages in progressive California have risen by 1 percent in the last 40 years, says a study by the establishment California Budget and Policy Center.
Report: California’s Middle-Class Wages Rise by 1 Percent in 40 Years
Middle-class wages in progressive California have risen by 1 percent in the last 40 years, says a study by the establishment California Budget and Policy Center.
“Earnings for California’s workers at the low end and middle of the wage scale have generally declined or stagnated for decades,” says the report, titled “California’s Workers Are Increasingly Locked Out of the State’s Prosperity.” The report continued:
In 2018, the median hourly earnings for workers ages 25 to 64 was $21.79, just 1% higher than in 1979, after adjusting for inflation ($21.50, in 2018 dollars) (Figure 1). Inflation-adjusted hourly earnings for low-wage workers, those at the 10th percentile, increased only slightly more, by 4%, from $10.71 in 1979 to $11.12 in 2018.
The report admits that the state’s progressive economy is delivering more to investors and less to wage-earners. “Since 2001, the share of state private-sector [annual new income] that has gone to worker compensation has fallen by 5.6 percentage points — from 52.9% to 47.3%.”
In 2016, California’s Gross Domestic Product was $2.6 trillion, so the 5.6 percent drop shifted $146 billion away from wages. That is roughly $3,625 per person in 2016.
The report notes that wages finally exceeded 1979 levels around 2017, and it splits the credit between the Democrats’ minimum-wage boosts and President Donald Trump’s go-go economy.
The 40 years of flat wages are partly hidden by a wave of new products and services. They include almost-free entertainment and information on the Internet, cheap imported coffee in supermarkets, and reliable, low-pollution autos in garages.
But the impact of California’s flat wages is made worse by California’s rising housing costs, the report says, even though it also ignores the rent-spiking impact of the establishment’s pro-immigration policies:
In just the last decade alone, the increase in the typical household’s rent far outpaced the rise in the typical full-time worker’s annual earnings, suggesting that working families and individuals are finding it increasingly difficult to make ends meet. In fact, the basic cost of living in many parts of the state is more than many single individuals or families can expect to earn, even if all adults are working full-time.
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Specifically, inflation-adjusted median household rent rose by 16% between 2006 and 2017, while inflation-adjusted median annual earnings for individuals working at least 35 hours per week and 50 weeks per year rose by just 2%, according to a Budget Center analysis of US Census Bureau, American Community Survey data.
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