US Pay Inequalities Improve, But Wealth Gap Widens in Fed Report

The Federal Reserve said income inequality fell over the last three years for most Americans, but the change did little to narrow persistent wealth disparities.

Lower-income families overall saw modest pay gains in the three years through 2025. Incomes declined for those at the top end of the distribution, who derive a large share of their income from more volatile components such as capital gains and businesses.

The wealth gap remained wide, the report shows. Americans’ median net worth rose 2% to $215,900, while average net worth rose 7% to $1,241,500. The disproportionate average gains underline the wide wealth gap based on net worth, with the top 10% of families holding 56 times more wealth on average than the bottom 20%.

The triennial survey is widely regarded by economists as the most comprehensive data on the economic well-being of American households, including changes in wealth, income, debt and financial security.

The data help shed light on the divergence between the stock market, which in recent years has pushed to new record highs, and measures of consumer sentiment, some of which are hovering near record lows.

The report showed a decline in the share of families who owned stocks between 2022 and 2025, to 56% from 58%. That coincided with a strong rise in the S&P 500 index, and the Fed said those in the bottom half of the income distribution “accounted for nearly all of the overall decline in participation” in the stock market over that period.

The new data show how the economy has evolved from earlier in the decade. Americans have spent down their pandemic savings and are now increasingly turning to debt and other methods to maintain spending, which has remained robust even as inflation outstrips wage gains.

Though the share of families with any type of debt remained stable at 77%, the report highlighted “an important indicator of potential financial distress,” the proportion of families with particularly large debt burdens. Some 8.6% of families had payment-to-income ratios greater than 40%, the largest share since 2010, according to the figures.