Gini Coefficient Hits New High: US Wealth Inequality Reaches Unprecedented Levels

American economists are warning of a concerning phenomenon—the Gini coefficient, which measures income and wealth inequality, has risen to its highest level in 60 years. This sharp increase reflects an unprecedented level of wealth disparity in the United States, and this divergence may not be a short-term phenomenon but an inherent feature of modern America’s economy.

Moody’s chief economist Mark Zandi stated that this is not a cyclical or temporary issue but a deep, structural challenge. Since the COVID-19 pandemic changed Americans’ financial habits, the “K-shaped economy”—where high-income and low-income groups follow vastly different economic trajectories—has become a focus for policymakers and investors. Now, economists’ warnings have escalated to serious academic consensus: this dual-track economic structure is deepening and difficult to reverse in the short term.

Gini Coefficient and Wealth Concentration: Data Reveals the Severity of Economic Divide

Data shows a shocking economic reality. The latest Federal Reserve statistics indicate that in Q3 2025, the wealth held by the top 1% of Americans reached nearly 32%—a historic high; meanwhile, the bottom 50% hold only 2.5% of the total wealth. This means an unprecedented gap has formed between the wealthiest 1% and the poorest half of the population.

The rising trend of the Gini coefficient is particularly noteworthy. A report released earlier this month shows that this indicator has hit a 60-year high, reversing the brief balance brought by pandemic-era stimulus policies. Federal Reserve Chief Economist Beth Ann Bovinno pointed out that this turning point signals the ongoing worsening of wealth inequality.

Tracking data from the U.S. Bureau of Labor Statistics further confirms this trend—compensation as a share of GDP has fallen to its lowest level in over 75 years. This means that during the past 15 years of economic growth, ordinary workers have seen a shrinking share of the “pie.” Moody’s research also shows that last year, consumer spending among the top 20% of earners reached multi-decade highs, while the remaining 80% saw this indicator fall to historic lows.

Even more concerning, Zandi pointed out that over the past six years, the overall spending of this 80% of ordinary consumers has consistently failed to keep pace with inflation, implying that the economic living standards and purchasing power of most American taxpayers are actually declining.

Roots of 30 Years of Economic Divide: Why Are Winners Winning More?

This economic divide did not appear out of nowhere. Joe Bruselas, chief economist at RSM, a U.S. tax consulting firm, traced the historical roots of this trend. He believes that this segmented economy originated from structural adjustments during the Reagan administration in the 1980s. About 20 years later, under the impact of the early 21st-century global financial crisis, the structural features of the K-shaped economy became even more apparent.

The 2008 financial crisis marked a turning point. The collapse of the housing market led to widespread wealth erosion, and soaring unemployment permanently limited the income potential of those of prime working age who lost stable jobs. Bruselas recalls that the Great Recession set the stage for the subsequent “winner-takes-all” economic pattern—if you work and live in certain sectors of the economy, your situation is like living in a different world compared to the bottom tier.

Zandi pointed to another key factor: the decline of unionization rates in the U.S. at the end of the 20th century. This trend directly weakened workers’ bargaining power for wages and accelerated income polarization.

Pandemic Accelerates Wealth Gap: High-Income Groups Pull Further Ahead

Although COVID-19 initially plunged everyone into hardship, it ultimately became a catalyst for widening economic disparity. Since the outbreak in March 2020, the S&P 500 has risen over 130%. This significant stock market rally mainly benefited high-income groups with much higher stock ownership than the average person, further boosting their wealth.

In the early pandemic, low-income groups temporarily saw significant wage increases due to government stimulus and labor shortages. However, this short-lived balance has been broken. Data from U.S. banks shows that last year, high-income earners’ wage growth began to outpace that of low-income earners; for most of 2025, high-income groups also experienced faster consumption growth.

Consumer behavior also reflects this divide. A report from U.S. Bank shows that households earning less than $75,000 annually spend a smaller proportion on travel, experiences, and other non-essential categories compared to pre-pandemic 2019 levels; meanwhile, households earning over $150,000 are increasing their spending in these areas. Airlines are rushing to develop luxury services, while fast-food companies are focusing on affordable meal options—vivid examples of this polarization.

A consumer survey from the University of Michigan indicates that in 2025, the confidence gap between high- and low-income groups regarding their financial situation has widened to its largest in over a decade. The most impoverished feel increasingly marginalized, which also explains why politicians emphasizing “affordable living”—from President Donald Trump to New York City Mayor Eric Adams—are gaining votes.

Policy Dilemmas and Risks: High Gini Coefficient Difficult to Address

Looking ahead, economists are not optimistic. Several experts warn that policies like Trump’s “Build Back Better”—which cuts welfare programs such as Medicaid and food stamps for the poor—will further deepen economic polarization.

Bruselas states that to fundamentally improve this situation, the U.S. must focus on tax reform and expanding social welfare systems. However, current government measures to ease the burden on citizens are “limited.” While the Trump administration introduced policies like temporary caps on credit card interest rates and bans on institutional investors buying residential properties, their overall effectiveness remains insufficient. Recent data shows that inflation in the U.S. still exceeds the Federal Reserve’s healthy 2% target.

More daunting challenges lie ahead. Economists warn that the development of artificial intelligence will lead companies to further cut jobs in an already unstable labor market. Challenger, Gray & Christmas, a U.S. consulting firm, reports that layoffs in American companies are projected to surge over 50% in 2025 compared to the previous year. Under such circumstances, the persistently high Gini coefficient will be difficult to reduce.

Barry Bannister, chief equity strategist at Stifel, a U.S. brokerage, stated in a client report this month that this K-shaped economy “is not sustainable” at the economic level. Federal Reserve Chair Jerome Powell also said that making high-income groups the main drivers of consumption is “a question worth pondering.”

Zandi’s views further reinforce this concern. He pointed out that U.S. economic growth relies heavily on a few key sectors—healthcare is the only industry consistently adding jobs in the labor market, and the rise of large tech stocks has driven recent stock market gains. Meanwhile, growth in consumer spending is mainly driven by high-income groups. The rising Gini coefficient vividly reflects how fragile this “isolated pillar” economic structure is.

Zandi warned that the foundation of the U.S. economy is not solid but resembles a structure supported by a few isolated pillars. If any of these pillars collapse, the entire economic system could face risks. This reality reveals that both the high Gini coefficient and the deepening K-shaped economy are exposing the fragility of the U.S. economy.