"By Far the Most Important Single Factor behind Lagging Middle-Class Incomes"

"It’s now widely accepted that rising household debt helped set the stage for our economic crisis; this debt surge coincided with rising inequality, and the two are probably related (although the case isn’t ironclad). After the crisis struck, the continuing shift of income away from the middle class toward a small elite was a drag on consumer demand, so that inequality is linked to both the economic crisis and the weakness of the recovery that followed."

Paul Krugman in The New York Times explains why inequality hurts the economy.