Moody Top Economist Mark Zandi Warns on Growing Inequality: Are there solutions?

 For some time, we have discussed the growing issue of inequality in the United States and around the world. The article below provides another data point suggesting that wealth and opportunity are becoming increasingly concentrated. There are ways in which we think that can help us reverse that trend and return wealth to our communities and the average person out there. 

There are many reasons why this has happened over the past 20+ years, and we will not explore all of them here. However, research shows that access to decision-makers often influences policies and economic outcomes. As people and organizations become wealthier, they tend to have greater access to policymakers and business leaders. Their expertise and perspectives can help shape laws, regulations, and economic priorities.

(Illustrative Only)

Representing a couple
who launched their
business on Ludington St.
They are strarting to export
and the money they make
stays local and 
helps their community. 

Attractive storefront
helps the downtown, 
attracts tourism and
visitors. Their exports
expand their reach
and improve their
digital footprint. 

They been thinking
about economics. 

Start-Up Firms

Perpetual Systems

20 Year Economic Metrics

Schumpeter Cycles

Large businesses are important. They create jobs, invest in communities, and drive innovation. At the same time, we should also focus on supporting small and medium-sized businesses. These businesses help local communities grow, strengthen downtown areas, create opportunities for entrepreneurs, and keep money circulating within local economies.

A healthy economy should be dynamic. New businesses should be able to start and grow, established businesses should continue to compete, and opportunities should be available to a wide range of people. When policies or systems favor some groups more than others, economic mobility can slow and wealth can become more concentrated.

This raises some important questions. How can we strengthen our downtowns and local economies? How can we encourage more people to start businesses? How can we help small and medium-sized businesses grow and succeed? And how can larger companies support startups and innovation while ensuring that entrepreneurs still have strong incentives to create new ventures?

At its best, capitalism is about opportunity. It allows people to apply their skills, ideas, and hard work to create value for themselves and others. A healthy capitalist system should encourage broad participation and provide opportunities for people from all backgrounds to succeed. Wc can call this Broad Based Capitalism vs Concentrated Capitalism.

The article below is another useful piece of information to consider as we continue discussing these important economic trends.

Mark Zandi Warns Growing Inequality Is Reshaping the U.S. Economy

• Moody’s Analytics Chief Economist Mark Zandi argues that the U.S. economy has become increasingly “K-shaped,” with high-income households continuing to prosper while most Americans struggle to keep pace with inflation.
• Households earning more than approximately $175,000 annually (the top 20% of earners) now account for nearly 60% of all consumer spending in the United States, making economic growth heavily dependent on affluent consumers.
• Spending by the top 20% increased about 6.5% over the past year, significantly outpacing inflation, while spending by the bottom 80% grew only 2.6%, leaving many households effectively falling behind rising prices.
• Zandi contends that this widening gap helps explain why many Americans feel dissatisfied with economic conditions despite positive aggregate indicators such as consumer spending and stock market gains.
• The concentration of spending power among wealthy households creates economic vulnerability because a slowdown in spending by affluent consumers could significantly weaken overall economic growth and increase recession risks.

Pan, J. (2026, June 22). Mark Zandi says top 20% of Americans now account for nearly 60% of spending as bottom 80% fall behind inflation. Yahoo Finance. https://finance.yahoo.com/economy/articles/mark-zandi-says-top-20-003019501.html