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Wealth inequality in the United States is having a big impact on how people spend money and live their daily lives. The richest 10% of Americans now account for 50% of all consumer spending, which means their choices heavily influence the products and services businesses offer. While the majority of Americans—the bottom 80%—have increased their spending by 25% in the past four years, that barely keeps up with inflation, which has gone up by 21%. On the other hand, the top 10% increased their spending by 58%, widening the gap between rich and average Americans. As more money flows toward luxury goods and expensive services, businesses are shifting their focus to meet the demands of wealthier buyers. This trend raises concerns among economists, as it could make it even harder for everyday families to keep up and be part of a balanced economy.

In August 2025, many Americans are feeling the strain of rising prices, especially when it comes to everyday essentials like food, gas, and healthcare. This is largely due to ongoing inflation and new tariffs that have made goods more expensive. The Federal Reserve, led by Chair Jerome Powell, is being cautious about making interest rate cuts, saying they’ll wait until inflation drops closer to their 2% goal. While some progress has been made, the chance of a rate cut happening soon has decreased. As a result, people are uncertain about what’s coming next for the economy, especially with talk of a possible recession still in the air.

In 2025, despite a shaky economy and global uncertainty, Americans are actually spending more money than they did last year — about $117 billion more in the first half alone. Instead of cutting back, many people are turning to large, well-known retailers that they trust to deliver consistent prices and reliable service. These big companies have held special sales and offered membership programs that keep customers coming back. On the flip side, small businesses are having a tough time. Problems like supply chain delays and rising costs due to tariffs make it harder for them to match the prices and convenience offered by retail giants. As a result, shoppers are choosing the safer, more familiar options during uncertain times.

In 2025, more people are feeling hopeful about their finances, especially younger generations like Gen Z, who are becoming better at managing money and keeping track of their credit. In the UK, nearly half of households now feel optimistic about the year ahead, up from just over a quarter in 2022. A similar trend is happening in the U.S., where growing financial confidence is spreading, despite ongoing economic challenges. However, inflation is still a major concern on both sides of the Atlantic. In June, UK inflation rose to 4.1%, while U.S. prices are staying higher than the Federal Reserve’s 2% goal. Even with growing optimism, many households are still struggling with the high cost of living and keeping inflation as one of their top worries.

In late July 2025, Americans are facing a tricky economic situation as inflation starts to rise again and interest rates remain uncertain. The Federal Reserve is expected to keep interest rates steady during its upcoming meeting, mainly because inflation—while increasing—is not yet out of control. However, new tariffs and unclear trade policies are making everyday items more expensive, especially things like furniture and school supplies. On top of that, labor shortages caused by stricter immigration enforcement are pushing up wages and making it harder for businesses in farming and manufacturing to hire workers. This all creates a tough environment for families trying to save money and plan their budgets.

In July 2025, the U.S. economy is facing rising inflation, with prices increasing more quickly than earlier this year. According to June’s Consumer Price Index (CPI), prices rose 2.7% over the past year, and core inflation—which leaves out food and energy prices—was even higher at 2.9%. Experts believe this jump in inflation is partly caused by new tariffs put in place by the Trump administration, which have made imported goods more expensive. As a result, many families may feel extra pressure on their budgets. The Federal Reserve is keeping a close eye on these changes and may raise interest rates to help control inflation, though it’s still waiting for more data before making big moves.