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The weight of inflation and rising costs are weighing on many Americans, but not all. For the wealthiest households, rising prices are hardly a deterrent; in fact, they’re fueling a spending spree, for now.
According to Moody’s Analytics, Americans earning $250,000 or more annually — the top 10% of earners — now account for nearly 50% of all U.S. spending, the highest since 1989. In comparison, spending by middle and lower-income groups has stagnated or even declined.
This shift in consumer behavior has placed an unusual burden on the wealthiest Americans to sustain economic growth. Mark Zandi, Moody’s chief economist, pointed out that spending from the top 10% now accounts for nearly a third of the nation’s GDP. The booming stock market and real estate values have played a pivotal role in this surge, he noted, significantly increasing the net worth of high-income earners.
However, this reliance on the wealthiest households is far from stable. Booming stocks and housing markets are inherently volatile. A downturn in either market could trigger a ripple effect, undermining consumer confidence and potentially altering the spending habits of the wealthiest Americans.
“The resulting drama, and in some instances chaos, is creating substantial uncertainty,” Zandi notes.
David French, the National Retail Federation’s (NRF) executive vice president of government relations, echoed Zandi’s points, noting that more tariffs would only lead to greater anxiety and uncertainty for both American businesses and consumers.
Another concern is inflation, which remains at 2.8%, according to the Bureau of Labor Statistics — still above the Federal Reserve’s target of 2%.
Despite these risks, some investors remain optimistic that President Donald Trump may back down if the economy begins to struggle, creating a “fragile” situation, Zandi said. If a trade war escalates, however, the consequences could severely impact both the economy and asset prices.