WASHINGTON — The wealth gap in the United States has reached a historic milestone, with the top 1% of households now controlling more money than the entire American middle class, according to new data from the Federal Reserve.
The top 1% of households held nearly 32% of total US wealth in the third quarter of 2025, Federal Reserve figures show. The middle class — defined as the 60% of households in the middle of the income scale — held about 26% .
This marks the first time since the Fed began tracking this data in 1989 that the richest Americans have surpassed the middle class in total wealth share .
The bottom 50% of households by income held just 2.5% of national wealth during the same period .
The numbers reflect a decades-long shift in how money is distributed across American society. In 1989, the middle class controlled 36.4% of wealth, more than double the 17.2% held by the top 1% .
The trend accelerated after the pandemic. While many working families relied on government stimulus to stay afloat, billionaires saw their fortunes grow substantially .
Wealth inequality now stands at its widest level in 60 years , according to a key measure called the Gini coefficient .
Economists point to a "K-shaped" recovery from the pandemic recession, where those at the top have seen their assets grow while those at the bottom have fallen further behind .
Mark Zandi, chief economist at Moody's Analytics, told CNBC the divide is now "structural, not temporary" .
The gap stems largely from what people own. High-income households hold more stocks and other financial assets. The stock market rallied strongly in 2025, with corporate equities rising 20% from the previous year .
Middle-class families hold more of their wealth in homes. But the housing market slowed last year, with home prices up just 0.9% . This difference in asset types explains much of the widening gap, according to TD Economics .
The top 20% of households now own nearly 72% of total household wealth, close to the highest level since records began in 1989 .
Wage growth tells a similar story. Workers in higher-paying jobs continue to see solid pay increases. Those in lower-wage positions have watched their raises slow sharply .
Bank of America data shows households earning more than $150,000 are spending more on travel and premium goods than they did in 2019. Those making under $75,000 are spending less .
The split shows up in corporate results. McDonald's has added more value items to attract budget-conscious customers. Airlines are adding premium seats aimed at affluent travelers .
For the bottom 80% of households, spending has failed to keep pace with inflation over the past six years, Moody's analysis found. Their living standards have not improved since the pandemic began .
Younger and Black workers face higher unemployment. The jobless rate for Americans ages 20 to 24 and for Black workers rose faster last year than the national average .
Housing costs now take a larger bite from middle-class budgets. For about one-quarter of lower- and middle-income households, rent consumes more than half their yearly income, Bank of America researchers found. That share stood at 20% in 2019 .
New tax policies may widen the gap further. The tax cuts passed in late 2025 will flow mostly to higher-income households, according to the Tax Policy Center. Nearly 60% of the benefits will go to the top 20% of earners — those making about $217,000 or more .
At the same time, tighter rules for food assistance took effect February 1 for older adults, which could increase financial strain for some low-income households .
Some states with Democratic majorities are moving to raise taxes on the wealthy. California lawmakers have proposed a Billionaire Tax Act that would levy a one-time 5% tax on residents with a net worth of at least $1 billion .
Virginia, Washington state, Rhode Island and Michigan are considering higher tax rates on top earners. New York City's mayor has proposed an additional 2% income tax on millionaire residents .
Republican-leaning states are moving in the opposite direction. West Virginia and North Carolina are cutting income taxes or moving toward lower flat rates .
The share of national income going to workers as pay has fallen to its lowest level in more than 75 years. This means the average worker captures a shrinking piece of an economy that has grown steadily over the past 15 years .
Global data shows the US trend fits a wider pattern. Worldwide, the richest 10% of people own about 75% of all wealth. The bottom 50% own just 2% .
Fewer than 60,000 people — about 0.001% of the world's adult population — now hold three times more wealth than the 4 billion people who make up the bottom half of humanity, according to the World Inequality Report .