US household wealth is booming. Net worth crossed $181 trillion in late 2025, driven by soaring stock markets and still rising home values.
The President recently declared the start of an “economic” boom in the United States. He also celebrated the “defeat” of inflation.
But at the same time, the majority of Americans say the cost of living feels worse.
Both statements are true, and the gap between them explains more about today’s economy than any single inflation number.
Record wealth does not mean shared wealth
US household and nonprofit net worth rose by nearly $6 trillion in the third quarter of 2025 alone.
Most of that came from equities, lifted by the AI-driven rally, and from housing, which continues to hold value despite higher interest rates.
But while this looks like a success story on paper, those gains are uneven in practice. That’s because in this case, wealth is measured by assets instead of paychecks.
Stocks and homes are owned disproportionately by older and higher-income households.
Many younger or lower-income families own neither, or own them in small amounts.
For them, rising asset prices do not feel like a benefit. They feel like a barrier.
A higher home price helps a homeowner’s balance sheet, although it makes buying a home harder for everyone else.
A booming stock market lifts retirement accounts, while doing little for households living month to month.
This is how record wealth can coexist with widespread frustration.
The economy is adding value where ownership already exists, while leaving the cost of daily life untouched.
Inflation fell but prices stayed high
Headline inflation has cooled. After peaking above 9% in 2022, it dropped to around 2.7% by the end of 2025.
From a macro perspective, that is a major improvement. From a household perspective, it is something else entirely.
What consumers emphasize is that inflation measures how fast prices rise, not whether they come down.
Food, rent, insurance, and utilities are all priced far above where they were before the pandemic.
A grocery bill that jumped 25% over three years does not shrink just because inflation slows. It simply stops growing as fast.
Recent data underline the problem. Food prices rose 0.7% in December, the largest monthly increase in three years, even as politicians claimed grocery costs were falling.
And for households, these are felt every week at the checkout counter. Although inflation is lower, the price level is locked in, and that is what people respond to.
In fact, a recent survey has shown that 64% of voters say the cost of living is a “very serious problem.
Nearly 50% of voters say that the US economy is getting worse.
The asset economy and the cash flow economy
One way to understand today’s tension is to think of two economies running at the same time.
The first is the asset economy. It includes stocks, real estate, and private investments, which are doing very well.
AI enthusiasm lifted the S&P 500 by around 16% in 2025, while the Nasdaq rose even more. And home prices have risen despite higher mortgage rates.
The second is the cash flow economy. This is where wages, rents, groceries, insurance premiums, and interest payments live. Here, conditions are tighter.
Wage growth has slowed. The labor market weakened in parts of 2025.
Consumer credit keeps rising, with household debt growing at an annualized rate above 4%.
Households tied to the asset economy experience relief. Their portfolios grow faster than their expenses.
Households tied to the cash flow economy experience stress. They borrow more to cover basics and feel exposed to every price increase.
The national accounts combine both groups into one average. Daily life does not.
Credit is where the pressure is building
Few indicators capture this divide better than credit cards. Average credit card interest rates are now close to 20%, far higher than before the pandemic and far above other benchmark rates.
Research from the Federal Reserve Bank of New York shows that these spreads cannot be explained by risk alone. Market power, marketing practices, and consumer inertia play a large role.
Credit is no longer just for discretionary spending, as many households use it to manage essentials. Food, utilities, and medical bills increasingly end up on revolving credit.
When interest rates are that high, temporary price shocks turn into long-term financial strain. Even households with steady jobs find themselves stuck paying interest on last year’s groceries.
Political debates about capping credit card rates reflect real pain, although the proposals often ignore legal and institutional limits.
The underlying issue is simpler. Credit has become the pressure valve for an economy where prices reset upward, but incomes do not keep pace.
Why the data and the mood diverged
For decades, strong growth and rising markets eventually lifted public confidence. That link has weakened, and part of the reason is memory.
Many households compare today’s prices not to last month, but to five years ago. Another reason is ownership. Gains that accrue to balance sheets feel distant if you do not own the assets.
There is also a trust problem. When leaders point to record wealth or strong GDP while dismissing affordability concerns, households hear a denial of their experience.
Polls show that even in periods of growth, a majority now say the economy feels like it is getting worse. That reaction is not irrational. It reflects where growth is landing.
The economy has stabilized at the top while remaining tight at the bottom. Until policy addresses price levels, debt burdens, and access to assets, the numbers will continue to look good on paper and strained at home.
The lesson of the past year is that prosperity measured in trillions can still feel unaffordable when it bypasses the part of life people actually live in.
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