A soaring U.S. stock market has helped drive household wealth to new heights, but the gains are overwhelmingly benefiting the country's wealthiest.
According to a recent analysis conducted by RSM Chief Economist Joe Brusuelas and highlighted by Axios, rising stock prices are making the rich significantly richer while providing only limited benefits to the broader economy.
The disparity stems from who actually owns stocks. Data from the Federal Reserve's Distributional Financial Accounts show that the top 20% of income earners control approximately 87% of all stocks and mutual funds in the United States.
As of June, those holdings were worth roughly $55 trillion, up sharply from about $45 trillion a year earlier. By contrast, the bottom 80% of Americans collectively hold around $8 trillion in stocks and mutual funds, compared with approximately $7 trillion a year ago.
While both groups benefited from rising equity prices, the dollar gains accumulated by wealthier households vastly exceeded those experienced by the rest. Major stock indexes have repeatedly reached record highs, fueled by enthusiasm surrounding artificial intelligence, resilient corporate earnings, and expectations that interest rates may continue to moderate.
Economists often refer to the connection between rising asset prices and consumer spending as the "wealth effect." When households see the value of their investments increase, they generally feel more financially secure and become more willing to spend money. However, Brusuelas argues that the effect is weaker than many policymakers and investors assume because the gains are concentrated among high-income households.
Wealthier Americans tend to save or invest a larger portion of their additional wealth rather than immediately spending it on goods and services. That dynamic limits the extent to which stock market gains translate into stronger economic growth.
Research from economists at the Federal Reserve has identified a similar pattern. In a paper published last year, researchers found that the concentration of stock ownership among wealthier households helps explain why consumer spending recovered more slowly than expected following the 2008 financial crisis. While asset values rebounded, much of the resulting wealth accumulated among households with a lower propensity to spend.
The analysis also highlights a broader challenge in how economic performance is measured and discussed in public life. Politicians, business leaders, and television commentators frequently point to the stock market as evidence of economic strength. A rising Dow Jones Industrial Average or S&P 500 is often portrayed as proof that economic policies are working and that Americans are prospering.
President Donald Trump has long viewed stock performance as a key measure of economic success. In recent remarks discussing efforts to ease tensions with Iran, Trump cited market reactions as evidence that investors favored diplomatic progress. "All I know is every time we talked about the possibility of peace, the stock market shot up like a rocket ship," Trump said last week.
