Top 10% of earners drive US consumption as wealth gap challenges Trump’s economic narrative

The economy of US President Donald Trump exceeded expectations in his first year back in office, but this situation applies primarily to America’s wealthiest households.

According to the Royal Bank of Canada, the top 10% income bracket in the US spent $20.3 trillion in the first half of 2025, a figure nearly equal to the $22.5 trillion spent by everyone else.

This spending was triggered by a buoyant stock market, high real estate prices, and solid wage increases for the wealthy. Bank of America notes that the net salaries of the highest account holders increased by 4% last year, while income growth for poorer households was only 1.4%.

This spending power has kept the Trump economy vibrant. The Department of Commerce reported on Tuesday that the US grew at an eye-catching rate of 4.3% in the third quarter, thanks to an increase in personal consumption. The President described this as the “Trump Economic Golden Age in full gear.”

However, these strong figures hide the extent to which the wealthy are driving growth. While business leaders from Manhattan to South Florida look optimistically toward the future, this view is not shared by most voters.

In polls, a majority of Americans say they are struggling under the pressure of rising living costs and a weakening labor market. The Federal Reserve Bank of Boston states that credit card debts of low-income consumers have increased “significantly” compared to the pre-pandemic period.

While growth and asset prices rise, Trump’s approval ratings are falling. For some allies, this situation is surprising.

Economist Stephen Moore, a former Trump advisor, claims, “All the talk about the cost of living surprises me. I don’t fully understand it because the economy is truly very strong right now. If the trend of the last six months continues, it will become increasingly difficult for Democrats to maintain their narrative that the economy is not doing well.”

Undoubtedly, most of the traditional characteristics of a generally healthy economy are present. Business is going very well for Wall Street banks and law firms, and investors are pouring hundreds of billions of dollars into risky artificial intelligence ventures that are creating a new generation of billionaires. According to one estimate, merger and acquisition activity will reach $2.3 trillion in 2025; this represents a 49% increase over last year’s figure, and the benefits of this increase are flowing disproportionately to high-net-worth investors.

Corporate profits showed an increase of over $166 billion in the third quarter, following a reported $6.8 billion increase in the previous three months.

Luxury hotels, Swiss watches, and premium credit cards continue to see strong demand despite negative signals from consumer surveys.

Richard Ramsden, a managing director and partner at Goldman Sachs who oversees the large-bank investment research unit, told reporters earlier this month that leaders of banks and asset management companies believe the US has a solid foundation and argued that the narrative regarding a K-shaped economy—meaning the financial situation of the rich improves while that of the poor worsens—is “not supported by the data.”

While wealthy consumers spend more, BofA’s data revealed that spending growth for low-income households has remained positive.

Separately, S&P Global analysts expect consumer spending to moderate next year, while also noting that US households have balance sheets that have been “strong for decades.”

Government officials are confident that the atmosphere will improve if the president’s tax policies lead to more jobs and higher net salaries.

Furthermore, it is hoped that measures such as the creation of Trump-branded investment accounts for newborns and the expansion of investment offerings for retirement plans will ensure that working-class Americans benefit more from Wall Street’s rise.

Steve Bannon, who served as chief strategist during Trump’s first term, said the president must “constantly emphasize” how the economy is growing and that higher wages will stem from the supply-side tax cuts in the law titled the Great Wonder Act, which was passed in July.

“Strong economic growth, more and better jobs, raises: this is what MAGA voted for, and this is what they expect,” Bannon said in an interview.

If the economy continues its current trajectory, this message may be in vain.

Analysts warn that consumer spending could weaken if employment remains slow and unemployment, which rose to 4.6% last month, continues to increase.

The JPMorganChase Institute found that income growth has been weak this year, especially for older workers, and that the balances of bank account holders have remained flat.

The American Financial Services Association, representing consumer credit companies, warned earlier this month that lenders are preparing for a deterioration in credit performance as subprime borrowers show signs of stress.

At the Yale CEO Conference held in Manhattan last week, Federal Reserve Governor Christopher Waller, one of the finalists for the next presidency of the Central Bank, explained how the financial precipice has accelerated since the spring months.

“Wages are not changing. Surpluses have disappeared. Bank accounts have become closer to living paycheck to paycheck,” Waller, a former St. Louis Fed economist, told corporate executives gathered at the Ziegfeld Ballroom.

Despite this, Trump officials were encouraged by recent data showing a meaningful wage increase for non-supervisory employees last year. Although sentiment lags behind, stronger-than-expected holiday season retail sales and solid sales growth from major retailers show that Americans are still spending healthily.

Joseph Lavorgna, an advisor to Treasury Secretary Scott Bessent, said that if inflation continues to fall, real wage growth will also accelerate.

“To me, this is a recipe for a more broad-based and resilient economy that does not focus on the high-income group,” Lavorgna said.