According to Moody’s and Bank of America, the top 10% of earners now account for nearly 50% of all consumption—a sharp departure from historical norms—and their spending is up 58% since 2020. The top 5% of taxpayers with incomes above $220,000 also paid 65.7% ($1.38 trillion) of all U.S. federal tax revenues. Meanwhile, expenditures among middle- and working-class households have stalled.

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This dynamic breaks contemporary economic logic, which holds that lower- and middle-income groups—who spend a greater share of each dollar earned—are the engine of aggregate demand. Instead, the tax and consumption base is now overly reliant on high earners, who save more and are more sensitive to asset valuations than to wage or price shifts. Capital is pooling at the top and circulating less through the real economy. The result is weaker retail activity, rising hiring freezes, and a growing fragility. If the wealth effect fades, broad consumption could fall off a cliff.

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