View all Articles
Commentary By Allison Schrager

The Unequal Impact of Inflation

Income and wealth inequality has been rising since the 1980s. But what gets less attention is how much people consume. The following figure, using data from the Fed, shows who is buying consumer durables, which includes things like cars, washing machines, etc. And it shows that the bottom 50% is taking up a bigger share of consumer durable purchases. This explains why things like big flatscreen TVs and air-conditioning have become standard in most households. Even if the income distribution has become more unequal, how we actually spend has become more equitable. 

But if we are entering a high inflation period the data suggests it will hit lower income people harder, perhaps even more than in years past. They own the assets we spend money on, while higher earners have a growing share of assets that protect against inflation.

inequality-inflation-america

Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.

Interested in real economic insights? Want to stay ahead of the competition? Every Wednesday, e21 delivers a short email that includes e21 exclusive commentary and the latest market news and updates from around the Web. Sign up for the e21 Weekly eBrief

Photo by Igor-Kardasov/iStock