WASHINGTON: The US is in the middle of a historic and costly technological revolution, with the artificial intelligence buildout driving a level of investment set to eclipse the previous telecommunications boom, as well as national projects like the construction of rail and highway networks.
The transformation has spurred immense stock market gains that have boosted household wealth across the economy, which arguably has helped to keep consumer spending on track. But with investment gains concentrated among the already rich, some Americans are benefiting more than others.
And what's been dubbed a crisis of affordability can still be seen in the rising cost of home ownership or the price of ground beef -- a meaningful pinch for the great majority of households that derive most of their income from earnings rather than investments.
A bigger slice for the 1%
Ninety-nine percent of US households have cause to wonder what the AI market frenzy means for them. The rapid stock market gains in recent years have been fastest for the top 1%: Between the end of former President Joe Biden's administration and the second quarter of 2026, midway through Donald Trump's final term, only the top 1% gained a bigger slice of the national wealth pie, according to Federal Reserve data.
From the 99th percentile down, the share grew smaller, the data show.
A bigger pie all around
The lower 99% have not been left out entirely, though.
Household wealth jumped 16.5% from the end of the Biden administration through mid-2026, rising about US$26 trillion in absolute terms.
While less than half a trillion dollars of that went to the least-wealthy half of households, that still represented about a 10% gain.
The dichotomy - a rising share to the richest but rising wealth in general - is one of the confounding aspects of the US economy today and has prompted questions among economists over whether the country can grow sustainably if the division of wealth continues to get more skewed.
Spending holds but inflation takes a bite
So far the answer is...kind of. Sentiment remains sour, but spending surges on.
The amount of money going out the door of US households to buy goods and services continues climbing, and in fact on a dollar basis is rising faster than before the pandemic.
Economists looking for evidence of a "K shape" to the spending -- with an upper leg coasting and a lower leg struggling -- have reached mixed conclusions. Spending among wealthier households is strong, to be sure, but research by major banks and places like the Richmond Federal Reserve indicate spending at the lower end of the income and wealth distribution is at least holding up. Studies of household credit by the New York Fed have shown little evidence of a credit crisis yet among the less well off.
Yet on an inflation-adjusted basis, what's known as "real" spending is growing at about the same rate as it was before the pandemic. A rising gap between nominal and real spending shows what's lost to inflation. And that offers a clue to why the mood seems to have turned against Trump and Republican congressional candidates just a few weeks ahead of midterm elections.
Even as households seem able, so far, to chase the cost of living - whether through earnings, wealth, or careful shopping - they have to spend more to just keep pace, a grind that economists have identified as one of the main reasons inflation is so corrosive to public opinion.
Inflation persists and announces itself loudly
Trump in the 2024 presidential campaign offered a clear yardstick to measure his success, promising that he would not only tame inflation but that prices would actually fall from the start of his new term.
Lowering the overall level of prices is a perilous idea: In a growing, competitive economy, the price level typically rises, and only falls during downturns even as relative prices for individual goods and services shift around in both directions.
In the last 20 months or so, prices have risen, and the level of inflation rebounded from Trump's first months. Price pressure have persisted as the shock of import tariffs, energy costs associated with the Iran war, and now the AI boom have coursed through the economy.
The weight of it all can be seen in general statistics. Hourly wage growth and the Consumer Price Index have been increasing at about the same pace, but some of the marquee prices that are top of mind for shoppers and voters, like gasoline and ground beef, have soared.
Home affordability a sore point
Prices for day-to-day items are things that people learn to manage. Cut back a little bit here, skip a restaurant trip there, stretch the budget with casseroles.
Big-ticket items like homes, however, have a broader influence, and can shape how families form and grow, how households build wealth over time, and how people think about whether they are getting ahead or are stuck in place.
On housing in particular, the pandemic shock has had a long tail, and so far things have not gotten better under Trump.
In fact, with bond yields rising, home mortgage rates have jumped more than a full percentage point in the past year, intensifying what was already an unaffordable situation.