S&P: Wealth gap is slowing US economic growth

WASHINGTON (AP) - The Standard & Poor's rating agency says the rising wealth gap in the United States is complicating the rebound from the recession, making the economy more prone to boom-bust cycles.

The rising concentration of income among the top 1 percent of earners has contributed to S&P's cutting its growth estimates for the economy to a 2.5 percent annual pace over the next decade, down from a forecast five years ago of a 2.8 percent rate.

Part of the problem is that educational achievement has stalled in recent decades. S&P estimates that the U.S. economy would grow annually by an additional half a percentage point -or $105 billion - over the next five years, if the average the American worker had completed just one more year of school.

The S&P report advises against using the tax code to try to narrow the gap, saying higher taxes on the wealthy could remove incentives for people to work and cause businesses to hire fewer employees. Instead, it suggests that greater access to education would help ease wealth disparities.

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