Widening Wealth Divide Threatens US Economic Stability

The Widening Wealth Divide and Its Impact on the US Economy

a widening wealth divide. The top earners, those making roughly $153,000 annually, are driving much of the spending that fuels economic growth. Meanwhile, Americans in lower income brackets are struggling financially.

This disparity creates vulnerability. The economy is heavily reliant on spending by the wealthy, making it susceptible to downturns if the value of highly valued assets like stocks, homes, and cryptocurrencies declines.

Lower-income households, earning approximately $73,000 or less, are facing increasing financial difficulties. While many still have jobs and wages have kept pace with inflation, they lack the assets that have seen significant appreciation in recent years.

To maintain purchasing power, many have resorted to credit cards, which carry high annual percentage rates. This has led to a rise in delinquencies, with the share of overall consumer debt in delinquency at its highest level in nearly five years.

The share of credit card accounts with delinquencies of at least 90 days overdue has also climbed to its highest point since 2011. This trend is particularly concerning for nonprime borrowers, who are facing higher payment defaults and debt levels compared to the pre-pandemic era.

While there is no immediate crisis, these trends are worrisome. Economists are observing signs of consumer stress, with increased spending and higher credit card balances.

The widening wealth divide poses a significant risk to the US economy. It is crucial to address this issue and ensure that economic growth is more inclusive and sustainable.