Federal Reserve Governor Lael Brainard said that rising income inequality is hampering the growth of the U.S. economy. Consumer spending is the main engine of economic growth, but it has recovered slower than expected.
She explained that households with lower levels of wealth tend to spend more of their income gains compared to those with higher levels of wealth. Currently, there is a shift in income with wealth moving away from the middle class and a wealth gap affecting by the economy.
Aside from slow income growth, middle America also must deal with rising costs of education, health care and housing. Data from the Fed reveals that a third of middle income adults would have to sell something or borrow money if they need to pay an expected expense of $400.