The best days of the American economy are long in the past, and better days for the US are unlikely in the foreseeable future.
The 20th-century idea of an “American Dream”  – where a sizable majority of people in the US could become or aspire to become middle-class, affluent or even extremely wealthy – is mostly dead in the second quarter of the 21st.
According to a report from Moody’s Analytics in February, the richest 10 percent of Americans (households with an annual income of at least $250,000) drove half of all US consumer spending (about $10 trillion) between September 2023 and September 2024. The fact that 12.7 million households could collectively outspend much of the rest of the nation is truly jaw-dropping. It points to the end of an economy that has depended primarily on the needs-based and discretionary spending of ordinary working Americans since the end of World War II.
The biggest surprise of all on the end of the American dream, though, is that for tens of millions of Americans, this is not a surprise. The dismantling of the American dream and the consumer capitalism that defined the nation from 1945 through the housing bubble bust in 2008 began more than a half-century ago.
The gradual austerity leaders imposed on social welfare and education programmes combined with multiple rounds of tax cuts for the wealthy and the corporations, killed social mobility, especially for Americans living in poverty. The transition from manufacturing to service industry jobs, along with automation, regional shifting, downsizing, and the offshoring of millions of other jobs, the saddling of millions of Americans with healthcare and higher education debt … All of these changes and more have turned the American middle class into a class of strugglers and not strivers. And the worst thing is, this is exactly what the wealthiest of Americans have wanted for decades.
By the measure of most experts, the economic power of ordinary Americans peaked sometime between 1970 and 1974. More than six out of 10 Americans could claim middle-class status, and Black, Latinx, and other Americans of colour had begun to climb into the US middle class in larger numbers. The story goes that the OPEC oil crisis, brought on by the US supporting Israel during the Yom Kippur War of 1973, along with the deindustrialisation of the American Midwest, ground down the US economy from 1973-74 onward. The combination of higher unemployment and higher inflation, known as stagflation, ended a three-decade run of endless US economic dominance and prosperity. But this story makes it seem as if a set of unfortunate circumstances ended the Pax Americana. In truth, the major corporations, the wealthiest of Americans and the federal government began shifting resources away from ending poverty and sustaining the American working and middle classes during the 1970s.
The nation’s richest individuals once paid as much as 91 percent of their earnings for every dollar over $200,000 in the 1950s, and a 70 percent income tax rate in the 1970s. The Reagan-era tax cuts brought the highest tax rates down to between 50 percent and 28 percent during the 1980s. Although there were some small increases in the highest income tax rates under President Bill Clinton in the 1990s, by then, investments in social welfare programmes had not kept up with inflation for nearly 20 years, and with welfare reform, they would never fully recover.
As of the Trump tax cuts during his first term in office, corporate taxes are at an all-time low of 21 percent. These policies have led to a massive shift in wealth from middle-class, working-class, working-poor and impoverished Americans, towards the rich and massive corporations.
Carter C Price and Kathryn Edwards authored a RAND Corporation working paper in 2020, estimating that between 1975 and 2018, tax cuts and social welfare austerity had led to a nearly $50 trillion transfer of wealth from the bottom 90 percent of Americans to the top 10 percent in wealth. Worse still, this transference had accelerated in the 2010s to an average of $2.5 trillion annually – all before the COVID-19 pandemic.
In the meantime, things have been bleak for ordinary Americans in other areas of the economy. The federal minimum wage has stayed at $7.25 since 2009 (the minimum wage also went through an eight-year period of stagnation in the 1980s). Monopolisation and downsizing have continued to cost most Americans living-wage jobs, as half of all working Americans make less than $50,000 a year, and a quarter of all workers make less than $25,000.
“If you filter the statistic to include unemployed people who can’t find anything but part-time work or who make a poverty wage (roughly $25,000), the percentage is actually 23.7 percent. In other words, nearly one of every four workers is functionally unemployed in America today – hardly something to celebrate,” Eugene Ludwig, the former US comptroller of the currency, wrote in Politico earlier this year. So much for the best economy the US has seen in decades, at least that was the claim of former President Joe Biden.
The US, then, is back to its pre-Great Depression economy. Except that in 2025, it’s an economy in which the consumer habits of the wealthiest 10 percent have an outsized influence compared with the bottom 300 million Americans. One cannot truly have consumer capitalism if most consumers cannot make enough money to afford to rent or buy a home, take a vacation, or even pay for food and basic healthcare. But this was the end goal of wealthy Americans pretty much all along, with help from both political parties. Any remaining American dream is but a mere fantasy these days. All because all the on-ramps to general middle-class prosperity have been carpet-bombed.