Wealthiest 10% of Americans Drive Bulk of Consumer Spending
While many Americans are cutting back, their wealthier neighbors are spending freely. According to a report by the Wall Street Journal (WSJ), the top 10% of earners — households making at least $250,000 per year — are shelling out cash for things like vacations and luxury goods. These consumers make up just under half of all consumer spending, the highest figure in data dating back 35 years, as analyzed by Moody’s Analytics.
Economic Dependence on Wealthier Americans
Three decades ago, wealthier consumers accounted for about 36% of spending, but now they account for nearly half. This means that economic growth is “unusually” dependent on wealthier Americans’ spending, with estimates suggesting that close to a third of the gross domestic product is driven by this group. Higher earners have increased their spending by 12% between September 2023 and September 2024, while working-class households have begun spending less. According to Mark Zandi, chief economist at Moody’s Analytics, “The finances of the well-to-do have never been better, their spending never stronger, and the economy never more dependent on that group.”
Economic Graph
Discrepancy in Spending Trends
The report notes that while richer Americans have increased their consumer spending well above inflation rates, the rest of the country has not seen similar growth. The bottom 80% of earners spent 25% more than they did four years earlier, while prices increased by 21% during that period. In contrast, the wealthiest 10% spent 58% more during the same period.
Powered by Wealthier Americans
Concerns Amidst Spending
Despite their spending habits, more affluent consumers are still concerned about their financial well-being, particularly due to the looming possibility of tariffs on imported goods. This concern is reflected in the University of Michigan’s Surveys of Consumers, which showed a 9.8% drop in consumer sentiment for the month, with a 15.9% year-over-year decline. This decline was led by fears of tariff-induced price increases.
Research has shown that a significant percentage of consumers and small businesses are aware of the potential impacts of tariffs, with expectations of higher prices and product shortages. Many consumers are worried about the personal financial implications of these tariffs, indicating a broader concern beyond just the overall economy.
Financial Gains Impacting Spending
It is evident that the wealthiest Americans are playing a significant role in driving consumer spending in the country, with economic growth relying heavily on their financial decisions.
