Households making $250K or more are driving the economy: report

As prices rise and wages stay stagnant, Americans are being more cautious about what they spend their hard-earned money on — except for those who earn the most.

The top 10% of earners in the United States — households making a combined annual income of $250,000 or more — are spending more, bolstered by stock market gains and returns on real estate investment, The Wall Street Journal reports. According to an analysis by economic research firm Moody’s, those consumers account for 49.7% of all spending in the U.S., a record high in three decades.

While it may not sound surprising that people who earn more spend more, it is unusual that the economy is so reliant on the small, affluent demographic.

Mark Zandi, chief economist at Moody’s, estimates that almost one-third of the U.S. gross domestic product comes from the spending habits of the top earners. They tend to be older and own more investments and property, both of which are rising in value, widening the wealth gap.

The wealthiest clients at Bank of America are using credit and debit cards more, with a focus on luxury goods, according to the bank. From designer bags to first-class airline tickets to cruise trips, the top 5% of households spent 10% more on luxury splurges compared to last year.

In comparison, companies and businesses that cater to a less upscale customer base are performing poorly. For example, Kohl’s and Family Dollar — both advertised as more cost-effective stores to shop at for lower income families — are closing stores across the nation, while businesses like Royal Caribbean Group and Delta Air Lines are reporting better business in recent months.

“The finances of the well-to-do have never been better, their spending never stronger, and the economy never more dependent on that group,” Zandi told WSJ.