On the surface, the U.S. economy appears remarkably resilient in late 2025. Retail sales are steady, job growth continues, and consumer confidence remains surprisingly robust. But a closer look reveals a troubling truth: much of this so-called strength is being driven almost entirely by the spending habits of the wealthy.
The Illusion of Broad Economic Resilience
Recent data from the Commerce Department shows that while overall consumer spending is holding up, the gains are heavily skewed. Households in the top 10% of income are spending significantly more on luxury goods, travel, and high-end services—masking stagnation or decline among middle- and lower-income Americans.
“What we’re seeing isn’t a broad-based recovery,” says Dr. Elena Martinez, an economist at the Brookings Institution. “It’s a two-tier economy: one fueled by asset-rich households, and another struggling with inflation and stagnant wages.”
How the Rich Are Propping Up the Economy
Since 2023, stock market gains, real estate appreciation, and private equity windfalls have swelled the balance sheets of America’s affluent. Unlike most Americans—who rely on paychecks—this group can tap into wealth to fund consumption even during uncertain times.
This dynamic distorts key economic indicators:
- Retail sales: Luxury retailers like LVMH and Tesla report strong demand, while discount chains see flat or declining traffic.
- Travel & leisure: First-class air travel and five-star hotel bookings are at record highs; budget travel is down.
- Services spending: High-end healthcare, private tutoring, and concierge services thrive—while basic service sectors lag.
By the Numbers: Spending Disparities in 2025
| Income Group | Year-over-Year Spending Change | Primary Spending Categories |
|---|---|---|
| Top 10% | +8.2% | Luxury goods, international travel, investments |
| Middle 60% | -1.3% | Groceries, utilities, used cars |
| Bottom 30% | -4.7% | Essentials only; cutting discretionary items |
Policy Blind Spots and Misleading Signals
Federal Reserve officials and policymakers often rely on aggregate data to guide interest rate decisions. But if that data is inflated by the ultra-wealthy, it risks leading to misguided policy—like keeping rates too high for too long, further squeezing average households.
“The Fed sees ‘resilience’ and assumes the whole economy is healthy,” warns economist James Lin. “But they’re reading a dashboard that only shows half the car.”
Tariffs, Inflation, and the Squeeze on Main Street
Meanwhile, new tariffs on Chinese imports—aimed at protecting U.S. manufacturing—are pushing up prices on everything from electronics to appliances. While the wealthy absorb these costs with ease, middle-class families are cutting back on non-essentials, delaying major purchases, or relying on credit cards.
Credit card delinquency rates for subprime borrowers have risen to 9.1% in Q3 2025—the highest since 2009—according to the Federal Reserve Bank of New York.
What This Means for the 2026 Outlook
If the wealthy pull back—even slightly—due to market volatility or tax policy changes, the broader economy could stall quickly. There’s little cushion beneath the surface.
“We’re not seeing organic, wage-driven growth,” says labor economist Priya Kapoor. “We’re seeing wealth-driven consumption that’s inherently fragile.”
Sources
- The New York Times: Data showing a resilient economy largely reflect spending by the rich
- Federal Reserve Bank of New York: Quarterly Report on Household Debt and Credit (Q3 2025)
- U.S. Bureau of Economic Analysis: Personal Consumption Expenditures by Income Decile (October 2025)
- Brookings Institution: “The Two-Tier Recovery” (September 2025)
