How Trump’s economic policies are widening America’s wealth gap
Today, at 30, Pinkham owns a home in the Seattle area and plans to build an expensive addition. When he and his wife considered having children, he says child care costs weren’t a major concern and if he lost his job he would have enough savings to survive for years.
But he still has a negative view of the economy, based on what his friends and family tell him.
“There are a lot of people whose incomes don’t increase when the stock market goes up,” said Pinkham, who votes for Democrats. “For me personally, I’m doing OK. But then if you look at the macro numbers, I don’t think it’s in the right place.”
The Trump administration’s regulatory cuts, along with tax breaks given to corporations in last year’s tax law, propelled stocks to record highs last year. It’s those that invest heavily in tech companies that gain the most: Just seven tech companies, including Amazon and Meta, are responsible for 40% of last year’s gains in the S&P 500.
Even though most Americans invest in the stock market, a disproportionate share of the gains have gone to the wealthy, with the richest 10% of households owning about 90% of all stocks, according to Federal Reserve data.
These same households were responsible for about half of all consumer spending in 2025, the highest rate since at least 1989, according to Moody’s Analytics. Wealthy households have also boosted the housing market and new car sales over the past year. Walmart said last month that most of its growth came from households earning more than $100,000.
Jeremy Kregar, 23, considers himself lucky among his group of college friends. He earns $21 an hour working for an optometrist in Portland, Oregon, where he collects a relatively affordable rent of $1,000 a month.
But his salary barely covers his bills, including paying off his $20,000 student loan. Some days, he said he skipped meals because he couldn’t afford groceries and made too much money to qualify for food stamps. The idea of owning a home, saving for retirement or building an emergency savings fund seems hopeless, he said.
“From my lived reality and that of my friends, it doesn’t seem like anyone is doing better. It seems like everyone is doing worse,” Kregar said. “It’s like the government is enlightening us.”
One way Trump has affected Americans’ bottom lines is through his tariffs, which have driven up retail prices, said Doug Holtz-Eakin, president of the American Action Forum, who worked in the George W. Bush administration. Higher prices disproportionately affect those with less disposable income who must absorb price increases.
Tariffs “hurt the bottom end much more than the high end,” Holtz-Eakin said. “And they are the source of many headwinds in the labor market. »
The slowdown in the labor market is putting significant pressure on households. Wages are not rising as quickly as in recent years, and employers have cut back on hiring. The US created just 584,000 jobs in 2025, the worst year for hiring since Covid. And most of the growth was driven by a handful of sectors, like health care and education.
Economists have blamed this on factors including rising costs and pricing uncertainty, over-hiring by companies post-pandemic, and the growing use of robotics and AI.
“We’ve seen virtually no job growth. If you look outside of health care and education, we lost jobs in 2025,” Holtz-Eakin said. “The job market is not strong. People are not getting hired.”
Measuring Trump’s actions
The economy was once Trump’s biggest selling point: He centered his 2016 campaign on fighting for working-class voters. Once he took office, wage growth accelerated for the lowest-paid workers and unemployment fell to its lowest level in decades, before the disruptions caused by the pandemic.
But during his second term, Trump’s economic approval rating plummeted.
A White House official said the administration intends to follow a strategy similar to that of Trump’s first term: using tax cuts and regulatory changes to spur investment, as well as a crackdown on immigration, which the administration says will tighten the labor market and raise wages.
“There is much work to be done, but this is just the beginning,” White House spokesman Kush Desai said in an email, adding: “Americans can rest assured that the best is yet to come.”
Trump has proposed some programs intended to help lower household costs, such as a cap on interest payments on credit cards and a 50-year mortgage that would reduce monthly payments. Many proposals have not been implemented.
Other measures, like reducing prices on a limited number of prescription drugs, will benefit some people — but could be offset by higher health insurance costs after Congress failed to extend Affordable Care Act subsidies.
Some programs will take years to take effect, such as Trump-branded savings accounts for young children. The federal government will deposit $1,000 into these accounts, which will be invested in the stock market and converted into retirement accounts when the children turn 18. Assuming the stock market continues to grow at about 10% per year, that $1,000 would become about $5,500 in 18 years. The amount could increase significantly if families could make the maximum contribution of $5,000 per year, which would benefit wealthier households.
Trump’s most direct impact on Americans’ finances may come when they file their taxes; many households will get a bigger refund thanks to Trump’s “big, beautiful bill” signed into law last summer. Middle-income households could get a tax cut on overtime, and some seniors will get a tax break on their Social Security income.
But the biggest gains from the new tax cuts will go to wealthier households, including those who own businesses or expensive homes in states with high property taxes and those who receive multimillion-dollar inheritances. The law also extends tax cuts granted during Trump’s first term that were set to expire.
“There are things in the bill like no tax on tips, but they are much, much smaller” compared to interventions that help the wealthy, like the estate tax, said Owen Zidar, an economics professor at Princeton University.
He pointed to a Tax Policy Center analysis that found households earning between $460,000 and $1.1 million would see an average tax cut of $21,000 in 2026. Meanwhile, middle-income households earning between $67,000 and $119,000 would see an average tax cut of about $1,800.
These reliefs come on top of decades of tax cuts, like those given to business owners during Trump’s first term, that have benefited wealthier households and allowed them to continue accumulating more wealth, Zidar said.
Meanwhile, those like Liz Doyle in Oklahoma continued to struggle to afford basic necessities.
Doyle, 67, who voted for Trump, said rising prices for everything from coffee to insulin are straining his monthly budget, which comes almost entirely from Social Security.
“The prices of groceries are absolutely ridiculous,” Doyle said. “Coffee prices, what is happening in the world?
Her property taxes have quadrupled in the past two years, she said. She doesn’t have a 401(k) and only owns a small number of stocks, so she hasn’t benefited much from the market’s rise. Occasionally, she sells vegetables, like okra, from her garden at the local farmers’ market to earn extra income.
“President Trump has done much better than Biden,” said Doyle, who cited the lower inflation rate under Trump. “But the question is: Is Trump so good, or is Biden so bad?
Kregar, who voted for former Vice President Kamala Harris in the 2024 presidential election, said her experience in economics since graduating from college that year has shifted her views toward the Democrats.
“Every time I go to the grocery store, I’m filled with dread,” Kregar said. “In the meantime, we’re going to build a ballroom in the White House? As an American, that’s like a slap in the face.”
