The United States is in the midst of a vicious cycle of inequality and recession: Inequality prolongs the downturn, and the downturn exacerbates inequality.
...The Great Recession has made inequality worse, which is likely to prolong the downturn. Those at the top spend a smaller fraction of their income than do those in the bottom and middle — who have to spend everything today just to get by. Redistribution from the bottom to the top of the kind that has been going on in the United States lowers total demand. And the weakness in the U.S. economy arises out of deficient aggregate demand.
Inequality of incomes was higher in most OECD countries in the mid-2000s than in the mid-1980s. Only a few bucked the trend: France, Greece and Spain moved towards greater equality of incomes over the past 20 years.