On MS NOW’s Morning Joe today, Steve Rattner illustrated the unequal experiences of Americans in Trump’s economy.
As data released earlier this week reinforced, American consumers continue to grow ever more concerned about the state of the economy, particularly as the war in Iran drags on with no relief in sight from high energy prices and overall inflation continuing to mount.
The latest reading of consumer sentiment showed Americans’ views of their own financial situation has just hit an all-time, 73 year low, well below even financial crisis and Covid levels. Interestingly, since the pandemic, consumer sentiment has diverged from another, seemingly similar measure, consumer confidence, which has also dropped about 10% since Trump took office. Why the difference? For one thing, consumer sentiment is focused on the individual situation of respondents, including with respect to inflation. Consumer confidence is more oriented toward views of the broader economy and doesn’t ask about inflation.
But inflation is clearly on the minds of Americans. When Donald Trump was again elected in November 2024, expectations for price increases over the coming year was down to 2.6%, a sharp recovery from Covid levels. It shot up following the Liberation Day tariff announcement but never fell back to pre-election levels before jumping again, to 4.8%, after the war with Iran began and oil prices rose. Meanwhile, actual inflation has begun to accelerate, reaching 3.8% last month compared to a year earlier, versus 2.9% at the end of 2024.
Different groups of Americans have fared differently, leading to what has been named the “K-shaped economy,” one in which those at the top do far better than those at the bottom. Compare, for example, the performance of the stock market relative to consumer confidence. The two historically have moved, in broad terms, together. But since Covid, they have diverged to an unprecedented degree. In contrast to lagging consumer confidence, the stock market continues to notch record high after record high. (The top 1% of Americans own roughly 50% of all shares.)
Another way to see this disparity is to compare the growth of corporate profits to the increase in wages. Corporate profits have been rising at a double digit rate, including a stunning 28% increase in the first quarter of this year for companies in the S&P500. Meanwhile, wages have been increasing at less than 4% a year. (And after inflation, wages are now declining.)
The disparity in wealth creation — 87% of shares are owned by the top 10% of Americans by net worth — has helped fuel dramatically different consumption patterns. The share of consumer spending by the top 10% reached 46% in the fourth quarter of 2025, leaving 40% for the bottom 80%. The stress on the wallets of lower end consumers has been noted repeatedly by companies in their earnings reports.
One example of this stress is with respect to gasoline purchases. In the past, the behavior of various income groups has tended to move together (with the exception of following an earlier run up in gasoline prices in 2023). But in March, after the war against Iran began, the level of purchases across incomes diverged widely). Americans earning $125,000 or more kept their purchases at roughly the same level. However, those earning less than $40,000 reduced gasoline usage by 7%, and gasoline buying by those with incomes between $40,000 and $125,000 fell by about half that rate.
