CHART: Political Polarization And Inequality Go Hand-In-Hand

Gerard Minack, head of developed market strategy for Morgan Stanley, has some new commentary in the firm’s Cross Asset Strategy note.

Politics has become a more intrusive factor for investors. The prospect of heightened political uncertainty is one reason to think risk asset valuations will be structurally lower compared to the past 30 years.

Rising inequality has gone hand-in-hand with rising political polarization. Exhibit 4 shows income inequality in the US (Gini coefficient) and a measure of polarization in the US Congress.

Check out the correlation in this chart:

political polarization

Photo: Morgan Stanley

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