The richest 10% now account for nearly half of U.S. consumer spending

The richest 10% of Americans now fund almost half of consumer spending, while many other households trim purchases and watch every bill. That divide sits at the center of the U.S. economy in 2026.

Stocks remain near record levels despite a rougher artificial intelligence trade, so wealthy investors still have money to spend. Most families do not own enough financial assets to feel that benefit at supermarkets, gas stations, or inside their bank accounts.

This disparity has existed for many years. According to Beth Ann Bovino, the chief economist of U.S. Bank (NYSE: USB), the pandemic has just made it clearer. Bovino stated that shocks have different impacts on various income levels, including the current oil shock. Economists refer to this trend as a K-shaped economy, where the rich keep getting richer while others get poorer.

Wealthy households keep U.S. spending afloat as other consumers cut costs

Federal Reserve data shows that the top 1% controlled 29.2% of total U.S. wealth at the end of 2025, compared with about 20% in the early 1990s. The bottom half held only 5.3%.

According to estimates by Moody’s Analytics, the richest 10% of Americans were responsible for almost half of all purchases by U.S. consumers in 2025. This share is the biggest ever measured. Their expenditures supported the level of aggregate demand in the country despite persistently low consumer confidence and expensive debts incurred by many families.

It turns out that economists are no longer worried about the damage the Iran war has done to U.S. growth. The problem is that inflation did not come down much, thus restricting monetary policy space for the Fed. A July poll by The Wall Street Journal found that forecasters expect inflation-adjusted gross domestic product to rise 2.1% between the fourth quarters of 2025 and 2026. Their April estimate was 2%, which also matched last year’s growth.

The average chance of a recession over the next 12 months dropped to 25%, down from 33% in April and the lowest since early 2025. Job forecasts improved too. Economists expect unemployment to finish December at 4.3%, rather than 4.5%. They see payrolls adding around 65,000 jobs each month during the coming year, up from 45,000.

Persistent inflation blocks new Federal Reserve rate cuts through December

Economists expect the Consumer Price Index to climb 3.4% during the 12 months ending in December, above April’s 3.2% call. They also raised their 2026 forecast for core personal consumption expenditures inflation to 3.2% from 2.9%. That measure removes food and energy and receives close attention from Fed officials.

Energy fears were much worse when the U.S. and Israel attacked Iran at the end of February. Iran then closed the Strait of Hormuz, which usually handles around 20% of global oil supplies. Crude traded at $67.02 per barrel just before fighting began, then reached $112.95 in April.

The shock faded faster than expected because the economy uses less oil than it did decades ago, while higher stock values supported purchases. After the U.S. and Iran reached a June ceasefire and reopened the strait, oil fell to $68.55 on July 6. Fighting restarted later. Trump said the ceasefire was finished, and crude closed Friday at $71.41. Economists expect it to end in December, near $70.

Kevin Warsh became Federal Reserve chair in May after Trump nominated him in January. He now faces inflation above the central bank’s 2% goal. Economists expect rates to stay between 3.5% and 3.75% through December, ending the gradual cuts that began in 2024. Only 15% think an increase is likely.

Belief in the independence of the Fed has increased after President Trump failed in his attempts to use the Fed politically through former Fed chairman Jerome Powell. 90 percent of the traders on CME think that the Fed is independent or very independent, while fewer see the Fed as partially independent compared to October.

Warsh wants less guidance about future rate decisions. Nearly half of the respondents still want the Fed to publish its economic forecasts and dot plot. Another 27% want forecasts without the dots, while 15% want the projections dropped. The survey covered 72 economists from July 2 through July 7, and some skipped certain questions.

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