Economists Turn to Magic 8-Ball for Cause of Malaise

Wayne Ellis

[unhappy Christmas shopper]

Economists Turn to Magic 8-Ball for Cause of Malaise (Boston.com)

It seems economists in the United States may be consulting their own “Magic 8-Ball” to figure out why the American economy isn’t stronger. You may remember the Magic 8-Ball from your childhood, featuring an oversized billiard ball with a window in it. That window contained a die with incredibly vague answers to potential questions: “Chances are good” is an example of one answer. Well, when economists were asked the question of why the U.S. economy isn’t doing any better, their 8-Ball told them: “blame the U.S. income gap.” Sure, stocks are still chugging along, but economists claim that to the rich go the market spoils, leaving middle-class America — and low-income America — grasping at straws. Because these affluent homes spend a lower percentage of their funds than low-income and middle-class people, the American economy isn’t benefiting as much as it should. A possible solution is to “spend more” money. But the situation leaves investors unsure how to read these economic tea leaves and partly explains the market’s recent retreat.

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