A comprehensive new report released by the Congressional Budget Office (CBO) portrays a stark transformation of the American economy over the last four decades, revealing a deepening divide where the wealthiest households have dramatically expanded their economic footprint while the middle class has steadily lost ground.Recommended Video According to the data, which spans from 1979 through 2022, the distribution of national income has skewed heavily toward the very top. The report reveals the top 1 of households grew their share of income before transfers and taxes from 9 in 1979 to 18 in 2022, effectively doubling their slice of the economic pie.

A hollowing out of the middle While the top tier prospered, the rest of the economic ladder struggled to maintain its standing. The CBO found as the top 1 seized a larger portion of market income, the share going to the lowest quintile dropped from 5 to 4.

This means most of the compression occurred in the middle. Even after accounting for the stabilizing effects of the safety net and the tax code, the middle class has seen its relative status diminish.

The share of income after transfers and taxes held by the middle three income quintiles decreased by 6 percentage points over the 43-year period. Conversely, the share of after-tax income going to the top 1 doubled from 7 to 14.