Trump’s former adviser warns 'hardworking Americans are suffering' in this US economy
The US economy is in a weird position right now. While President Trump is confident that he has strengthened the economy during his second term, Americans across the country are complaining about affordability issues, claiming they cannot afford basic necessities like food and rent. Interestingly, the President’s former chief economic advisor, Gary Cohn, insists that both these perspectives are true.
Speaking on CBS’ ‘Face the Nation’ on Sunday, Gary Cohn, who is also the sitting vice chairman for IBM, acknowledged that the US economy is growing at a very high rate. However, he insisted that those numbers don’t tell the complete story and that America is suffering from a K-shaped economy at present. In fact, Cohn explained the issues of the current economy and how it’s affecting normal citizens, as he said, “We have a massive wealth effect at the top end, and we have got hardworking Americans having a very difficult time paying their bills, and they are suffering in this economy."
A country experiences a K-shaped economy when there’s a massive divide between the wealthy and lower-income citizens. While those at the top experience incredible economic growth, the ones in the bottom are severely affected by economic shifts, which often lead to financial stress. Cohn believes that this is exactly the reason why Trump chose affordability as his primary focus, as he said, “The White House is going on the offensive. The president is going to spend time out on the road talking about affordability. Affordability will be the issue between now and the mid-term elections."
As per a Business Insider report, other experts have also mirrored Cohn in their explanation of the current economic status. Gregory Daco, a chief economist at EY, mentioned how high borrowing costs and a two-year affordability crisis are troubling most consumers, before adding, "Slower income growth is pushing many upper-median, median, and lower-income families to draw down savings and rely more heavily on credit to sustain their habits."
Similarly, Joe Brusuelas, the chief economist of RSM, shared the sentiment as he said, “When I take a look at the policy landscape, it's all tilted toward the upper spur of the K. So I'm expecting a further widening of that fundamental inequality in coming years." In fact, Brusuelas believes that the United States will need several policy shifts to reshape the economy and bring it back on track.
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