Wealthy Americans Aren’t Feeling Inflation

The top 10% of earners in the US — households that make $250,000 or more annually — are powering the economy with increased spending… while the bottom 80% of earners cut back to keep pace with inflation and the rising cost of living.

Why It Hits: The US is increasingly becoming a country of haves and have nots, as the middle class shrinks. That divide is already having immense implications for the economy, politics, and society at large.

Behind the Purchases: A study by Moody’s Analytics found that the wealthy have no reason to pinch pennies.

• The top 10% of earners now account for a record 49.7% of spending in the US (the most since the tally began in 1989) and accounts for one-third of the gross domestic product.
• Over the past four years, their spending increased by 58%, while the bottom 80% increased by 25%. To note, the cost of living has increased by 21% during that time.
• So, what’s behind the surge in spending? Wealthy Americans’ assets  — property values, stocks, etc. — are soaring in value.
• So, the top 20% of Americans have seen their net worth increase by 45% (roughly $35 trillion) since 2019, while the bottom 80% only grew by $14 trillion.

Checkout: JPMorgan Chase analyst Matthew Boss says there’s an “extreme bifurcation” happening in the US economy. Companies like Delta and Royal Caribbean are reporting growth, as wealthy Americans are increasing their spending on things like luxury goods, premium airline bookings, and cruises. But companies that serve more modest customers — like Kohl’s and Big Lots — are going out of business. That’s reshaping the economy.

But it could all vanish in an instant. If home valuations or stocks start to shrink in value, all that excess spending from the wealthy could go with it.