A significant majority of Americans are now living lives of permanent financial stress, and debt delinquency is on the rise. For bankers, that’s a recipe for problems with profitability, and perhaps with safety and soundness, warns Gene Ludwig.
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Describing our economy as “K-shaped” is all the rage. Unlike many shorthand descriptions of economic realities, however, this characterization is, as a general matter, fundamentally accurate. Yet much of the existing commentary still understates how profound and deeply embedded this structural divergence has become — and how critically consequential it is for the banking industry.
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For years, I have focused on this very issue through the Ludwig Institute for Shared Economic Prosperity, where we have been analyzing long-term trends in unemployment, cost of living, wage data and GDP across multiple economic…
