The top 20% of income earners in the country hold about 87% of stocks and mutual funds worth about $55 trillion, up from $45 trillion in June 2025, according to an analysis of Fed data by RSM.

The "top 20%" refers to households earning roughly $160,000 or more annually, while the "bottom 80%" includes households earning below that level, according to Federal Reserve income distribution data.

A booming stock market is definitely making the rich richer, but it won't do much to lift prospects for most everyday Americans or the broader economy, concludes RSM's chief economist Joe Brusuelas in an intriguing new post.

That's because the bottom 80% of workers and income earners hold about $8 trillion and has seen less of a gain in dollars — up from $7 trillion last year. This is wealth "on paper" because these investors and retirement savers hold for the long term to avoid capital gains and/or taxes.

In other words, they just don't sell.
 

The Big Picture

Rising stock prices help a very small slice of folks at the top, and the rich don't spend much of those gains — which would at least drive overall economic growth.

'The Wealth Effect'

Rising stock prices make people feel richer, and that so-called "wealth effect" does lead to more spending — but not as much spending as you might think, Brusuelas writes.

That's because most of the gains go to the highest earners, and they don't increase their spending enough to make a big impact on the economy.

In a paper identifying this phenomenon last year, researchers at the Federal Reserve said that it helps explain the weak recovery in spending following the financial crisis.

Between the lines: Even as the booming stock market leaves most folks behind, lawmakers use it as an economic indicator — but it has its limits.

Trump's Favorite Gauge

The market has often served as President Trump's barometer for the economy. A a rally Tuesday in Pennsylvania, Trump explained that his push to resolve the Iran conflict was driven by what he saw happening to stocks.

"All I know is ​every time we talked about the possibility of peace, the stock market shot up like a rocket ​ship," Trump said.

The bottom line:Take this as your latest reminder that the stock market is not the economy.