Official figures for GDP suggest the US economy has until recently been growing much faster than others in the G7, but they ignore the question of who is gaining from growth. In this blog post, John Lourenze Poquiz and Nghi Nguyen show that excluding the highest earners from real GDP per capita significantly reduces the perceived US growth advantage in recent years, even though the small minority of high earners have benefited the most in other advanced economies too.
Official GDP figures suggest that the United States (US) has been outpacing other advanced economies in terms of growth in recent years—at least until the tariff-related turmoil of 2025. The data shows that US real GDP grew 12.2% between Q4 2019 and Q4 2024. In contrast, the UK’s real GDP grew only 3.4% over the same period, while Eurozone growth was little better at 4.9%.
Yet consumer sentiment in the US was notably sluggish in the same period. This dissonance hints that official economic indicators might not fully reflect households’ lived experiences.
So, it is worth asking whether the US’s strong economic performance reflects the experience of the broader population. A crucial, yet too often overlooked, dimension of the growth story is the rising income and wealth inequality. Real GDP growth, by definition, reflects changes in aggregate income—but aggregate figures can mask how growth is distributed across the population. This raises an important question: what happens to measured growth when we strip out the income gains and consumption of the top 1% or 10%? While the top 1% income share in the UK and EU remained relatively flat (around 12-13%) since the 2008 financial crisis, it jumped from 17.9% to 20.7% in the US over the same period.
In this blog post, we take a closer look at growth in the US and key European countries—adjusting real GDP per capita to exclude the highest earners’ income and consumption.
Our results offer a different perspective on recent economic performance: one that reflects the experience of the vast majority and makes the US economic performance look far less exceptional.
We begin by adjusting real GDP per capita by excluding the estimated income of the top 1% and top 10% of earners in each country, using data on their pre-tax national income shares. In this analysis, we refer to ‘Official’ as the standard real GDP per capita measure (inclusive of all earners), while ‘Adjusted’ refers to real GDP per capita excluding the income[i] of the top 1% or top 10% of earners.
Figure 1 shows the comparison.
- US: Official growth figures convey the usual narrative that the US leads its European peers such as the UK, Germany, and France. This US growth advantage is more pronounced in the recent decade (figure 1b). However, excluding the top 1% of earners results in a notable reduction in US growth, from an average of 1.4% to 1.1% (2008-2023) and 1.9% to 1.6% (2013-2023).
- European economies: Excluding the top 1%’s income in France leads to a slight reduction in the adjusted growth. But growth figures for Germany were slightly faster after adjustment. For the UK, removing the top 1% slightly raises average growth for the recent decade but not for the whole period 2008-2023.
In summary, comparing with the US, our estimates indicate that excluding the income of the top 1% narrows but does not eliminate the measured economic performance gap between the US and the three European economies (Figure 2).
We repeated the exercise for the top 10% of earners (Figures 3 and 4).
- Average annual growth rate convergence (Figure 3): Figure 3 shows the official and adjusted average annual growth rates. Notably, when excluding the top 10% of income, the UK’s average annual growth rate for the bottom 90% between 2013 and 2023 (1.4%) converges closely to the adjusted figures for the US (1.5%). Germany registers a modest increase in its growth after excluding the top 10% (2013-2023). In contrast, growth in France is slightly lower after adjustment in the same period.
- Reduced growth differences (Figure 4): Figure 4 illustrates the growth gaps relative to the US after the top 10% adjustment. The difference between the US and UK nearly disappears for the 2013-2023 period, at just 0.1 percentage points. The growth difference for Germany and France also declines substantially.
Thus, we find that excluding the top 10% of earners further narrows the economic growth gap with the US, more so than excluding only the top 1%. This is particularly pronounced for the UK and Germany.
Interestingly, the UK is the only country where growth for the bottom 90% is higher than that for the bottom 99%, with average annual growth rates of 1.4% and 1.1% respectively between 2013 and 2023 (Figures 3b and 1b). This aligns with existing research suggesting that the UK’s productivity slowdown has been driven by large urban centres, particularly London, where top-income earners are more heavily represented. For the US and Germany, growth for the bottom 90% is actually slightly lower than the bottom 99% rate, while for France they are the same.
Due to data limitations, our analysis using consumption expenditures (rather than income) focuses on the US and the UK for 2016 up to 2023 only. Our estimates show that the top decile of earners accounts for roughly 18% of total consumption expenditures in the UK and 23% in the US in 2023.[ii]
Similar to our findings with the income estimates, adjusting for the top 10% of earners’ consumption slightly raises the average real GDP per capita growth rate for the UK—from 0.8% to 1.2%. This change implies the majority of households experienced somewhat stronger consumption growth than the top 10%. Meanwhile, average real GDP per capita growth of the US is unchanged at 2%, suggesting that consumption growth patterns in the US are likely consistent across income brackets.
Our findings show that excluding the income of the top earners paints a different picture of comparative economic performance across advanced economies. These results highlight the need for policymakers to look beyond official GDP figures when assessing economic performance and wellbeing. An understanding of broad-based growth as it affects the majority of the population is essential for designing policies that respond to the lived experiences of the majority, particularly in addressing inequality, rebuilding trust, and ensuring that future economic gains are more widely shared.
An important caveat to our analysis is that it relies on simplifying assumptions. For instance, we assumed that inflation is uniform across income groups and that taking out the top earners does not impact taxation in a way the disrupts public sector services provision, among others. Nevertheless, we believe that our estimates still provide meaningful insight into the story of growth and income distribution.
Our estimates may help explain the apparent disconnect between strong official US growth figures and the persistent economic discontent reported in recent years. While aggregate GDP suggests robust US economic performance, the exclusion of top-end income growth reveals a much more modest experience for the majority of the population. This gap between the broad economic narrative and individual economic realities may underpin the growing sense of frustration and unease despite official indicators pointing to prosperity.
The US case demonstrates that strong official growth can mask rising inequality, with much of the population seeing limited gains. To avoid similar pitfalls, policymakers should prioritise measures that support income growth across all regions and income groups. Policy efforts to rebalance growth geographically, aiming to spread opportunities more evenly, remain a key priority in all the advanced economies.
[i] We must acknowledge the distinction between income and wealth. Our adjustments are based on top earners’ income shares, but wealth is far more concentrated, particularly in the US where the top 1% wealth share (34.8% in 2023) dwarfs their income share (20.7%). This greater wealth concentration likely contributes disproportionately to GDP via investment and consumption. Consequently, our income-based analysis might understate the extent to which official US growth is driven by the very top; a wealth-based adjustment could potentially show even greater similarity in the economic paths of the bottom 90-99% across these countries.
[ii] Caveat: Our estimate of the top 10% consumption share uses survey data on average weekly household spending for the top income decile. This approach may not fully reflect the true extent of consumption by wealthiest households within that top 10% due to potential survey under-reporting and the use of averages.
The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.
