The U.S. economy is increasingly divided into a “K-shaped” structure in which wealthy Americans continue to gain while lower-income households fall further behind—a trend economists now view as permanent rather than temporary. High earners benefit from rising stock markets, home values, and stronger recent wage growth, allowing them to spend more on travel and luxury goods. Meanwhile, most Americans struggle with the lasting effects of inflation, stagnant real wages, and rising costs for essentials.
The gap is not going to stop anytime soon, as the net worth of the top 1% of Americans reached a record share of nearly 32% in the third quarter of 2025. The bottom 50% of Americans is at 2.5% of the overall net wealth. This spread in the economy is evident in the recovery from the pandemic, but economists say it can be traced back decades. From the Reagan administration and the Global Financial Crisis of the late 2000s.
Looking ahead, experts warn inequality is likely to worsen due to policy choices that reduce social support, the growing impact of automation and AI on jobs, and a fragile economy reliant on a narrow set of strengths, such as high-income consumer spending and healthcare employment. Many economists caution that this “winner-take-all” economy is ultimately unsustainable and leaves overall growth vulnerable to shocks.
https://www.cnbc.com/2026/01/30/wealth-inequality-k-shaped-economy-united-states-consumer-spending-trump.html
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ReplyDeleteI wonder how the government could help address wealth inequality. In my public finance class, I learned that California proposed a tax that would tax billionaires 5% of their wealth as a one time measure to help fund public programs. However, this proposal resulted in multiple billionaires moving out of California to avoid the tax. Is this kind of more “aggressive” taxation strategy the way to go, or are there more subtle ways to deal with wealth inequality?
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