Recent economic data paints a stark picture of increasing inequality in spending patterns across the United States, highlighting a widening chasm between the top income earners and the rest of the population. Moody's Analytics Chief Economist Mark Zandi recently presented an analysis showing that this disparity has reached record levels, closely linked to speculative bubbles in the stock market, especially the significant rise in artificial intelligence (AI) related equities.
According to updated estimates from Moody's Analytics, the wealthiest segment of American households—specifically the top 20% with annual earnings exceeding $175,000—was responsible for nearly 60% of all consumer spending during the third quarter of 2025. This proportion represents the highest point in data records that span back to 1989. The consumption data displays a pronounced divergence: spending by the bottom 80% has steadily decreased, while expenditure among the top 20% has climbed sharply. This trend forms a distinct 'K-shaped' pattern in national consumption metrics, underscoring escalating economic stratification.
Zandi emphasizes that this growing divide corresponds closely to the "wealth effect" associated with soaring asset prices. He identifies two prominent episodes when inequality surged markedly: the late 1990s and the period following the COVID-19 pandemic. The late 1990s bubble was driven by speculative enthusiasm in internet stocks, whereas the contemporary surge is fueled by rapid growth and investor fervor centering on AI-related stocks.
Because high-income households predominantly hold equity portfolios, these stock market booms significantly augment their net worth. As their paper wealth expands, they tend to increase spending, which further amplifies inequality compared to the majority who depend chiefly on earned wages instead of capital gains. The bottom 80%, therefore, face diminishing relative spending power in contrast to the wealthiest quintile.
Zandi issues a cautionary note regarding the broader implications of an economy that hinges on investment returns concentrated in a small wealthy subset. Such dependence not only jeopardizes the stability and inclusiveness of economic growth but also renders the overall economy susceptible to fluctuations in stock market performance.
Beyond these economic concerns, the analyst links this rising consumption disparity to social tensions evident in increased public discontent and political fragmentation within the country. The growing divide between those able to reap the benefits of asset appreciation and those left behind may be eroding social cohesion.
For investors interested in the AI sector, various exchange-traded funds (ETFs) have exhibited mixed but generally positive performances over recent periods. For instance, the iShares US Technology ETF (NYSE:IYW) reported a one-year return of 23.11%, while the Fidelity MSCI Information Technology Index ETF (NYSE:FTEC) achieved 20.25% over the same timeframe. Contrastingly, the First Trust Dow Jones Internet Index Fund (NYSE:FDN) showed a more modest one-year gain of 3.96%. Other noteworthy funds include the Defiance Quantum ETF (NASDAQ:QTUM), which posted a significant 40.12% return over one year, and the iShares Expanded Tech Sector ETF (NYSE:IGM), with a 24.37% gain.
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