There have been increasing signals that wealthier Americans are spending more while lower-income Americans are significantly paring back their spending. Lower-income consumers have been hit hardest by rising inflation and escalating prices on essentials, with this month’s Consumer Price Index report<\/a> indicating a 0.3% increase on the month, putting the annual inflation rate at 3%.<\/p>\n Shortly after the CPI report was released, the Federal Reserve on Wednesday approved<\/a> its second straight interest rate cut, lowering its benchmark overnight borrowing rate to a range of 3.75% to 4%.<\/p>\n Meanwhile, the country is entering the fifth week of the government shutdown<\/a>, with many federal workers going without pay.<\/p>\n The Census Bureau estimated there were 35.9 million people in poverty in 2024, the most recent available data, with the weighted average poverty threshold for a family of four coming in at $32,130. The median household income, meanwhile was $83,730 last year, according to the bureau<\/a>.<\/p>\n The top 10% of households saw their income increase 4.2% between 2023 and 2024, but there was no meaningful change for the bottom 10% of households, the bureau said in September.<\/p>\n Consumers with the highest purchasing power have benefited<\/a> from stock market rallies and rising home values. Data<\/a> from JPMorgan<\/a>‘s Cost of Living Survey found that higher-income consumers reported stronger economic confidence readings for the next year.<\/p>\n Recent earnings reports from companies touching all corners of the economy have indicated the K-shaped trend is beginning to take hold. This week, companies like Yum Brands<\/a>, McDonald’s<\/a>, E.l.f. Beauty<\/a>, Tapestry<\/a> and Under Armour<\/a> are preparing to release quarterly earnings reports and could report similar trends.<\/p>\n Last week, Chipotle<\/a> reported it’s seeing consumers who make less than $100,000 a year, which represents roughly 40% of the company’s customer base, spending less frequently<\/a> due to concerns about the economy and inflation. CEO Scott Boatwright said the company is seeing “consistent macroeconomic pressures” with a 0.8% decline in traffic for the quarter.<\/p>\n Coca-Cola<\/a> said in its third-quarter earnings<\/a> that pricier products like Topo Chico sparkling water and Fairlife protein shakes are driving its growth. Procter & Gamble<\/a> reported similar results, saying wealthier customers are buying more from club retailers, which sell bigger pack sizes, while lower-income shoppers<\/a> are significantly pulling back.<\/p>\n And some of the companies reporting this week have already indicated they may be seeing similar behaviors. In early September, McDonald’s CEO Chris Kempczinski\u00a0told<\/a>\u00a0CNBC’s “Squawk Box<\/a>” that the chain’s expansion of its value menu was due to a “two-tier economy.”<\/p>\n “Traffic for lower-income consumers is down double digits, and it’s because people are either choosing to skip a meal … or they’re choosing to just eat at home,” he said.<\/p>\n The trend isn’t limited to just food and beverage, either. In the autos world, consumers who can afford to buy new vehicles are on a spree, while those who are more price constrained are sitting out. Defaults and repossessions are on the rise while the average price for a new vehicle is setting records<\/a>.<\/p>\n And in the service industry, Hilton<\/a> earlier this month reported that it saw a drop in revenue for its affordable brands while its luxury offerings performed exceedingly well. Still, CEO Christopher Nassetta\u00a0told CNBC<\/a>\u00a0last month that he doesn’t expect bifurcation to last much longer.<\/p>\n “My own belief is that as we look into the fourth quarter and particularly into next year, we’re going to see a very big shift in those dynamics, meaning, I don’t think you’re going to continue to have this bifurcation,” Nassetta said. “That’s not to say I think the high end is going to get worse or bad. I just think the middle and the low end [are] going to move up.”<\/p>\n","protected":false},"excerpt":{"rendered":"A Taco Bell restaurant in El Cerrito, California, US, on Tuesday, April 29, 2025. David Paul Morris |…\n","protected":false},"author":3,"featured_media":353056,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[9167,64,81,51323,172664,6797,125828,13656,8001,79,2105,25797,16209,18110,6769,8110,988,11731,76489,522,78103,67,132,68,14228],"class_list":{"0":"post-353055","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-breaking-news-business","9":"tag-business","10":"tag-business-news","11":"tag-chipotle-mexican-grill-inc","12":"tag-christopher-j-nassetta","13":"tag-coca-cola-co","14":"tag-e-l-f-beauty-inc","15":"tag-earnings","16":"tag-economic-events","17":"tag-economy","18":"tag-food-and-drink","19":"tag-hilton-worldwide-holdings-inc","20":"tag-jpmorgan-chase-co","21":"tag-mcdonalds-corp","22":"tag-prices","23":"tag-procter-gamble-co","24":"tag-restaurants","25":"tag-retail-industry","26":"tag-tapestry-inc","27":"tag-transportation","28":"tag-under-armour-inc","29":"tag-united-states","30":"tag-unitedstates","31":"tag-us","32":"tag-yum-brands-inc"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115486927218663351","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/353055","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=353055"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/353055\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/353056"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=353055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=353055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=353055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"McDonald’s](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/11\/108193062-17568168221756816818-41460833767-1080pnbcnews.jpg\")
<\/p>\n