The U.S. economy depends more than ever on rich people

The top 10% of earners are splurging on everything from vacations to designer handbags

- Rachel Louise Ensign

Many Americans are pinching pennies, exhausted by high prices and stubborn inflation. The well-off are spending with abandon.

The top 10% of earners—households making about $250,000 a year or more—are splurging on everything from vacations to designer handbags, buoyed by big gains in stocks, real estate and other assets.

Those consumers now account for 49.7% of all spending, a record going back to 1989, according to an analysis by Moody's Analytics. Three decades ago, they accounted for about 36%.

All this means that economic growth is unusually reliant on rich Americans continuing to shell out. Mark Zandi, chief economist at Moody's Analytics, estimated that spending by the top 10% alone accounted for almost one-third of gross domestic product.

Between September 2023 and September 2024, the high earners increased their spending by 12%. Spending by working-class and middle-class households, meanwhile, dropped over the same period.

"The finances of the well-to-do have never been better, their spending never stronger and the economy never more dependent on that group," said Zandi, who oversaw the analysis, which was based on data from the Federal Reserve. The analysis runs through the third quarter of 2024 because that is the most recent data available.

Taken together, well-off people have increased their spending far beyond inflation, while everyone else hasn't. The bottom 80% of earners spent 25% more than they did four years earlier, barely outpacing price increases of 21% over that period. The top 10% spent 58% more.

A stock market selloff or decline in home values that rattles the confidence of the top 10% and causes them to cut back would have a significant effect on the economy. Consumer sentiment is starting to slide overall, including for the wealthiest third of consumers, thanks in part to tariff threats.