Jul 22, 2021 - Economy & Business

Inequality Index: Watch for volatility

Inequality index chart
Data: Morning Consult/Axios Inequality Index; Chart: Axios Visuals

The gap between the way people in different income groups experienced the U.S. economy got smaller in July, compared to the Morning Consult/Axios Inequality Index's June reading.

Why it matters: The economy may be at a turning point as expanded government fiscal support tails off — so signs of increasing inequality could start to pop up in the coming months, Morning Consult chief economist John Leer tells Axios.

How it works: The index compares the sentiment of three income groups — $50,000/year or lower; $50,000-$100,000/year; and $100,000/year-plus.

  • It measures the distance between the higher-income and lower-income groups' sentiment from each other and from the middle — as opposed to providing a snapshot of the distribution of income or wealth. A higher reading means more inequality.

The overall index is made up of four components. The one that most drove July's overall reading was the "employment expectations" sentiment.

  • Nudging the income groups closer together — i.e. driving inequality down — was increased fears of job loss among employed middle-income individuals, bringing them more in line with the high-income group's sentiment.
  • About 9.6% of those in the middle-income group said they feared job loss in the coming four weeks, up from 6.7% a month ago. That more closely matched the high-income group, which was at around 10% in both June and July.
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