High Earners Keep Buying But the Rest Are Budgeting Hard

 

In a year when many Americans are clipping coupons, stretching paychecks, and comparison-shopping more than ever, one group is keeping the economic engine humming: the top 10% of earners. A new wave of data suggests that if the U.S. economy enjoys a merry and bright holiday season, we’ll have the nation’s wealthiest households to thank.

According to fresh analysis from Moody’s Analytics, high-income Americans now generate roughly half of all consumer spending—a historic milestone that underscores how unequal the recovery has become. In the second quarter of 2025 alone, this group accounted for 49.2% of total spending, up sharply from 46% in 2023 and just 43% in 2020.

“Their financial situation is about as good as it’s ever been,” explained Mark Zandi, chief economist at Moody’s. And the spending numbers show it.

Flush at the Top, Frugal Everywhere Else

While high earners open their wallets, middle-income households are largely standing still. Americans in the 40th to 60th income percentile spent about $2.1 trillion in Q2 2025—barely budging from the same period in 2023 and 2024. For families facing steeper grocery bills, pricier rent, and the general squeeze of an affordability crisis, big spending simply isn’t on the table.

Consumer confidence also remains low, matching levels last seen at the height of the post-pandemic inflation spike in mid-2022. Economists say the picture is increasingly “K-shaped,” with affluent households climbing upward while low- and middle-income Americans tread water.

“Millions of Americans are riding out an affordability crisis,” said Taylor Jo Isenberg of the Economic Security Project. “Meanwhile, wealthier households—whose wealth continues to grow—are keeping their spending strong.”

Retailers Bet Big on the Wealthy

With holiday shopping underway, retailers know exactly where their strongest customers are. High-income consumers are expected to drive both the bulk of seasonal sales and most of the growth over last year.

“Upper-income shoppers will account for a disproportionate share of holiday sales,” said Jennifer Timmerman, senior investment strategy analyst at Wells Fargo Investment Institute. Shoppers with smaller budgets, she noted, will likely rely on discounts and buy now, pay later plans to get through the season.

Stocks and Homes Supercharge Spending Power

Two powerful forces are buoying affluent Americans: the long-running stock surge and soaring home values.

The AI-driven market boom has pushed stock holdings of top earners even higher. The S&P 500 has climbed more than 260% over the past decade—gains that overwhelmingly benefit households at the top, who own most of the country’s equities. By late 2025, the typical stockholder in the top 10% held $1.1 million in investments, up dramatically from 2022.

Real estate tells a similar story. Home prices have jumped more than 40% since 2020, and high-income owners—many of whom locked in ultra-low mortgage rates during the pandemic—are seeing their home equity swell while also enjoying greater returns on their savings.

“They’re getting more on their money market accounts than they’re paying on their mortgage,” Zandi noted. “It’s a uniquely strong position.”

A Delicate Balancing Act

But this prosperity comes with a warning. With overall consumer spending rising from $14.5 trillion in 2020 to $21.1 trillion in 2025, the U.S. economy is more dependent on high-income households than ever before. If affluent consumers cut back—even modestly—the ripple effects could be significant.

A cooling job market could be the first test. Unemployment reached 4.4% in September, the highest since 2021. “If the labor market begins to unravel,” warned Oxford Economics’ Ryan Sweet, “that’s going to hit confidence up and down the income distribution.”

Meanwhile, stock market swings remain a major wild card. “If stock prices were to fall and stay down, that would weigh on their spending,” Zandi said. “This group is driving the economic train. If they pull back, they’ll take the economy with them.”

A Season of Splurging—For Some

As the holiday season unfolds, America’s wealthiest households appear poised to carry much of the economic cheer—while millions of others focus on tighter budgets and creative cost-cutting. It’s a tale of two economies, intertwined yet traveling different paths, and the strength of one may determine the fate of the other in the months ahead.