The economy is far too tight for many Americans—more about how to fix that in a minute—but first some good news: Household wealth is on the rise.

And not by a small amount. New data from the Federal Reserve says household wealth grew by $14 trillion from the first quarter of last year through the third quarter. Even after adjusting for inflation, that’s a $12 trillion increase and an annualized rate of more than 10% growth—almost $20,000 for the median family.

For context, that’s roughly 20 times better than President Joe Biden’s annual tally. Put differently, in less than a year, President Donald Trump has delivered four times the household wealth of Biden's entire four-year term.

In fact, this skyrocketing increase is even better than Trump's first term, when household net wealth grew almost 7% per year, even with the government-imposed lockdowns during COVID that killed economic growth.

What’s driving the explosion in household wealth? A combination of lower inflation along with incredible economic expansion, productivity growth, deportations, tax cuts and the most deregulation in American history.

During Biden’s four years, household wealth appeared to increase a healthy 23.5%, but that was virtually all just inflation. The real, or inflation-adjusted, increase was a measly 2% during his term—less than half a percent per year.

But now inflation is way down under Trump and no longer eating away at increased household wealth. That means when the economy is growing at almost 5%, like it is today, it translates into a real increase in economic activity, not just higher prices.

Underpinning that faster growth is a surge in productivity, which is what makes us rich, and is currently running at almost 5% growth. That’s among the best rates since the Reagan administration.

This is driving profits, which, as our friend Larry Kudlow says, is the mother’s milk of stocks. Higher profits are driving stock prices higher, with the S&P 500 up 15% and the Russell 2000 index of small companies up 17%.

That profit growth could actually accelerate, thanks to tax cuts in the Big Beautiful Bill kicking in this year and trillions of dollars in investment pouring into the country because of Trump's tariff umbrella.

The stock boom was good for over $9 trillion in mutual funds, pensions, stock portfolios and private companies. We also have mom-and-pop small businesses that are either sprouting up or expanding due to lower deregulation as government gets out of their way.

We’ve also seen a trillion dollars in bond gains and consumer durables as interest rates drop and incomes rise. Even housing, which has leveled off, was still good for roughly $2 trillion in additional wealth.

Now, these are spectacular numbers, but of course a lot of Americans are not doing spectacular. Bank of America recently estimated that one in four households are living paycheck to paycheck, spending 95% of their income on essentials like housing, food, utilities, gasoline and debt.

The Federal Reserve estimates 37% of American adults can't cover a $400 emergency. Other estimates from Lending Tree are even higher. There are two keys for these people: lower prices and higher incomes.

To reduce prices, Congress needs to cut spending while slashing crony regulations, especially in health care and environmental mandates that drive up prices in housing, food and energy. But the other part is raising incomes, particularly for low-income households.

That means raising wages and getting able-bodied people off the couch and into a job.

Real wages have been soaring under Trump thanks to fast growth and more than 2.5 million deportations, where Americans take the job at higher the pay. But there's still roughly 10 million working age Americans who aren't working.

The biggest lever here is benefits because there’s a $1.5 trillion empire of welfare that pays millions to kick back and let the rest of us cover their bills. Trump's trying his best to cut off the fraud, but it takes Congress to actually cut benefits to the able-bodied to get them back to work—basically undoing the welfare expansion they passed under Biden.

To be fair, Congress did trim Medicaid for the able-bodied in the Big Beautiful Bill, but there's a still trillion and a half to go. If Congress finally gets on board with the Trump economic agenda, America will have three more years of soaring wealth, soaring wages and soaring jobs.

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Peter St. Onge, Ph.D, is senior economist and E.J. Antoni, Ph.D., is chief economist at the Heritage Foundation.

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