A has been divided in two for a long time.
In 1989, families in the richest 10% held 32% of total U.S. wealth, according to the Federal Reserve. In 2025, this number rose to 68%.
There’s a name for this phenomenon: the K-shaped economy. The rich keep getting richer, and everyone else is falling behind—at least by comparison.
The inequality in question has deepened significantly in recent times – particularly in the last three years, .
But it’s not just about how much people earn: it’s about what they own and how they spend their money.
Net worth
Americans of all income brackets have become richer over the past 3 years.
But the net worth of wealthy Americans is growing at a much faster rate than that of middle- and low-income Americans. The net worth of the richest 1% has grown by 30% in the last 3 years. The 40% of the middle class grew by less than 10% in the same period.
Why? It all comes down to three factors: housing, stocks and inflation.
Housing and shares
The richest 20% own more than half of the total value of residential real estate in the United States — a sector that has skyrocketed in recent years. And as mortgage interest rates have risen, low-income Americans have become further removed from the “American dream.” Only 3% of the value of residential properties in the United States belongs to the poorest 20%.
Compounding inequality further: In the immediate aftermath of the pandemic, when mortgage rates plummeted to historic lows, American homeowners unlocked $430 billion in home equity by refinancing their mortgages, giving them a significant economic advantage.
More than three-quarters of America’s financial assets, including stocks, are held by the richest 20% — and more than a quarter by the richest 1%. The S&P 500 index has appreciated 86.2% in the last three years. In contrast, cash has yielded less than 1% per year on average in recent years.
Inflation
Americans in different income brackets experience inflation in different ways: The basic necessities that low-income Americans spend a larger percentage of their income on (primarily housing and food) have become more expensive compared to the items purchased by wealthier Americans. This accumulates over time: Between 2005 and 2023, consumer prices grew 57% for the poorest 20% and 46% for the richest 20%, according to the Minneapolis Fed.
Bills
Americans earning less than $40,000 a year reduced spending starting in January 2023 and only began to recover in September 2024. And over the past three years, their spending, adjusted for inflation, increased just 1.3% — compared to 7.6% for families earning $125,000 or more.
High consumption by high-income earners has boosted overall demand for goods and services, helping to maintain some higher prices for all Americans.
Therefore, wealthy Americans not only have more money, they also have better opportunities to increase wealth than less advantaged Americans: They have access to the housing and stock markets that low-income Americans do not have access to. And they are, in a way, more protected from inflation.
