Wealthiest 10% of Americans Drive Bulk of Consumer Spending
While many Americans are cutting back, their wealthier neighbors are spending freely.
As the Wall Street Journal (WSJ) reported late Sunday (Feb. 23), 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, the report said, citing an analysis by Moody’s Analytics. Three decades ago, those wealthier consumers accounted for about 36% of spending.
This means that economic growth is “unusually” dependent on wealthier Americans’ spending, the report said. Mark Zandi, chief economist at Moody’s Analytics, estimated that spending by these consumers made up close to a third of gross domestic product.
Higher earners upped their spending by 12% between September 2023 and September 2024, the report said, while working class households began spending less.
“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.
The WSJ report notes that richer Americans have increased their consumer spending well above inflation, while the rest of the country has not. The bottom 80% of earners spent 25% more than they did four years earlier, while prices increased 21% during that period. The wealthiest 10%, meanwhile, spent 58% more, the report said.
But as covered here last week, more affluent consumers are still worried about their finances, as the possibility of tariffs on imported goods looms.
The latest installment of the University of Michigan’s Surveys of Consumers showed a 9.8% drop in consumer sentiment for the month, and a 15.9% year-over-year decline.
Although all five components of the index dropped during the month, the trend was “led by a 19% plunge in buying conditions for durables, in large part due to fears that tariff-induced price increases are imminent,” Surveys of Consumers Director Joanne Hsu said in a news release.
Research by PYMNTS Intelligence earlier this month found that 71% of consumers and small businesses said they were knowledgeable about the tariffs. Among this group 78% expected tariffs to lead to higher prices and 75% expected tariffs to bring about product shortages.
“More than half of those informed consumers — 57%, to be exact — think these tariffs will hit their wallets hard,” PYMNTS CEO Karen Webster wrote in a column last week. “They’re not only worried about the big picture economy (though 40% are concerned about that, too). They’re worried about their own bottom line.”
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