Wonkbook: The decline of the middle class is causing even more economic damage than we realized -- by Larry Summers

By Lawrence H. Summers I have just come across an International Monetary Fund working paper on income polarization in the United States that makes an important contribution to the secular stagnation debate. The authors — Ali Alichi, Kory Kantenga and Juan Solé — use standard econometric techniques to estimate the impact of declines in middle class incomes …   The latest economic and domestic policy from Wonkblog   A sign is seen in front of a foreclosed home November 19, 2008 in Rio Vista, Calif. (Justin Sullivan/Getty Images) By Lawrence H. Summers I have just come across an International Monetary Fund working paper on income polarization in the United States that makes an important contribution to the secular stagnation debate. The authors — Ali Alichi, Kory Kantenga and Juan Solé — use standard econometric techniques to estimate the impact of declines in middle class incomes on total consumer spending. They find that polarization has reduced consumer spending by more than 3 percent or about $400 billion annually. If these findings stand up to scrutiny, they deserve to have a policy impact. This level of reduction in spending is huge. For example, it exceeds by a significant margin the impact in any year of the Obama stimulus program. Read the rest on Wonkblog.   Top policy tweets "Interesting discussion including important point from @sangerkatz people mean different things by public option https://t.co/rMu7vcIG0X" -- @mhstein "Economists find expanding paid maternity leave (in Norway) not worth the cost. What do you all think? https://t.co/p8T2hO2XDK" -- @asociologist "How much would removing geographic mismatch in the labor market reduce unemployment? https://t.co/2wfGn1yoDa" -- @nick_bunker ADVERTISEMENT   Most Recent Posts from Wonkblog Wells Fargo CEO apologizes — again — but lawmakers aren’t having it Stumpf agreed to forfeit $41 million after the bank became entangled in sales scandal. By Renae Merle  •  Read more »   Meet the senators and congressmen who support marijuana legalization Congress lags far behind the public on marijuana reform according to a new report. By Christopher Ingraham  •  Read more »   Obama administration announces paid sick leave for government contractors — and a new policy to address pay disparities "Employers must adopt 21st century workplace policies." By Danielle Paquette  •  Read more »   Why so many of America's sushi restaurants are Chinese-owned There are deep forces that explain the rise of Japanese food all over the country -- and the surprising group of people behind the trend. By Ana Swanson  •  Read more »   Why people go @*@&@(*&! in the office The real reason people curse at work By Danielle Paquette  •  Read more »   The cost of slavery reparations is now within the boundaries of the politically acceptable A U.N. panel has called on the United States to pay reparations for "racial terrorism." By Max Ehrenfreund  •  Read more »   Does Donald Trump believe there’s a global conspiracy to help Obama? At this point, it'd almost be more newsworthy if Donald Trump wasn't contradicting himself. By Matt O'Brien  •  Read more »   The real reason Donald Trump’s favorite airports are so much better than America’s There's something you need to know about Donald Trump's strange fascination with foreign airports. By Ana Swanson  •  Read more »   The decline of the middle class is causing even more economic damage than we realized New research makes a compelling case for new policies to help the middle class. By Lawrence H. Summers  •  Read more »   ADVERTISEMENT   Chelsea Clinton ‘misspoke’ on marijuana risks, spokeswoman says The comments had perplexed legalization advocates. By Christopher Ingraham  •  Read more »   Critics say Wells Fargo CEO should forfeit more than $41 million after sales scandal The long-time CEO of Wells Fargo to face House committee Thursday. It won't be pretty. By Renae Merle  •  Read more »   These maps show how immigrants affect your state’s budget This new data reveals a lot about one of the biggest controversies in the immigration debate. By Max Ehrenfreund  •  Read more »   Marijuana really can be deadly, but not in the way you probably expect Just ask Keith Lamont Scott. By Christopher Ingraham  •  Read more »           Share Wonkbook:       Twitter      Facebook Trouble reading? Click here to view in your browser. You received this email because you signed up for a Wonkblog newsletter. For additional free newsletters or to manage your newsletters, click here. We respect your privacy. If you believe that this email has been sent to you in error or you no longer wish to receive email from The Washington Post, click here. Contact us for help. ©2016 The Washington Post, 1301 K St NW, Washington DC 20071