Wealth Inequality—A Tale of the Diverging Tails

PGIM Fixed Income

September 2019

By Nathan Sheets, PhD, Chief Economist, Head of Global Macroeconomic Research, and George Jiranek, Associate, Global Macroeconomic Research

U.S. households have come a long way since the Global Financial Crisis, but the thorny issue of wealth aggregation has accompanied the recovery. The Top 10% of U.S. households now hold 70% of the wealth, while the Bottom 90% account for just 30%.

In this paper, PGIM Fixed Income examines the underlying drivers of the widening wealth distribution and its potential economic effects. The policy prescriptions to narrow wealth inequality include approaches that will work more slowly than measures to directly restrain accumulation at the top, such as a wealth tax, but they will also have far fewer unintended consequences.