Navigating the Dual Economy
CHICAGO, May 8, 2008 —"The dual economy, or income inequalities, is one of the greatest challenges that we face. "If not solved, it will not only undermine today's economy by encouraging populism and more protectionist policies, but it will damage the future of all recent graduates," says Diane Swonk, chief economist of Mesirow Financial, in her May edition of Themes on the Economy.
"Work done at Mesirow Financial suggests that a record breaking 24% of income in the U.S. was generated by the top 1% of households in 2007, while a meager 11% of income was generated by the bottom 50% of households," notes Swonk.
In her May newsletter, Swonk provides the written version of a commencement speech she gave to economics majors at the University of Michigan. While speaking to some 1400 graduates and their families, she discussed:
- The decline in consumer sentiment, the lowest level since 1982. "This is despite significantly lower unemployment, and an economy that seems to add up on paper at least, to still be posting slightly positive growth."
- The squeezing of the middle-end and low-end of the income strata. "Everything from poor education to globalization has rendered their previous wages too high to keep their employers competitive. You now need at least an undergraduate degree to stay in the middle-class-a place where a home, 2.1 children, a dog, and two cars in the garage were once considered a given."
- An increased bifurcation in U.S. consumer spending in recent years. "The highest end of the income strata operates on a completely different plane that the rest of the economy.
- The importance of human capital, "our most valuable asset. We must invest more in education if we want to preserve any advantage that we have left in this world."
"We must find a way to allow those left behind to bridge the old economy into the new", she says. "They must be dealt with, either with a one-time payout that allows them the dignity to continue in this economy, or tax incentives that encourage retraining, even if it is for a lower paying job," concludes Swonk.
The May issue of Themes on the Economy as well as archived issues can be found at www.mesirowfinancial.com.
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Founded in 1937, it is an independent, employee-owned firm with $31.4 billion in assets under management and more than 1,100 employees in 30 locations across the country and in London. With expertise in Investment Management, Investment Services, Insurance Services, Investment Banking, Consulting and Real Estate, Mesirow Financial strives to meet the financial needs of institutions, public sector entities, corporations and individuals and was named one of Chicago's Best Places to Work by Crain's Chicago Business in 2008. For more information about Mesirow Financial, visit its Web site at www.mesirowfinancial.com.
For more information, contact: Diane Swonk, Mesirow Financial, 312.595.7122, or Olga Camargo, Mesirow Financial, 312.595.7128.
The Mesirow Financial name and logo are registered service marks of Mesirow Financial Holdings, Inc., © 2008, Mesirow Financial Holdings, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed are subject to change without notice. It should not be assumed that any recommendations incorporated herein will be profitable or will equal past performance. Nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy an interest in any Mesirow Financial investment vehicle(s).
Securities offered through Mesirow Financial, Inc. member NYSE, SIPC. Insurance services provided through Mesirow Insurance Services, Inc.
