Widening Gap: US Economy Shows Signs of Two-Speed Growth,Favoring the Wealthy
WASHINGTON – A growing disparity is emerging in the US economy,with income and spending growth increasingly skewed towards higher earners while lower-income Americans face stagnant wages and delayed homeownership,according to recent data. the trend, reminiscent of pre-pandemic conditions, signals a return to a “two-speed” economy where the benefits of growth are not broadly shared.
Data from Bank of America reveals that the lower third of US employees experienced faster growth in recent years, but that trend has reversed. Since the beginning of the year, higher earners have considerably outpaced their lower-income counterparts.
“As unemployment is slowly increasing and slowing down new jobs, wage growth has also alleviated. Especially for the worst paid,” confirmed Arin Dude,professor of economics at the University of Massachusetts Amherst.
in August, year-over-year wage and salary growth for the bottom third of employees fell to 0.9 percent – the weakest growth since 2016. Conversely, the top third saw a 3.6 percent increase, the highest since November 2021. This divergence extends to household spending, with lower-income households growing spending by onyl 0.3 percent in August, while higher-income households increased spending by 2.2 percent.
The disparity is further exacerbated by the performance of stock portfolios, which largely benefit wealthier households, while lower-income individuals frequently enough lack investments, according to reports.
“I think the American population is divided into two types, the happy ones, the owners of asset, and the unfortunate ones,” said Camelia Kuhnen, professor of economics from the University of North Carolina in Chapel Hill.
This economic divide is impacting homeownership, with many lower-income Americans unable to save for a down payment. The average age of first-time homebuyers rose to a record high of 38 years in 2023,up from 35 in 2023,according to the National Realtors Association.