But consumer spending has remained robust<\/a> despite these pressures, accelerating in May even as price increases reached their fastest pace since April 2023. To some, this indicated that the more affluent consumer was propping up a greater share of spending and keeping overall consumer expenditure figures afloat.<\/p>\n The Bank of America Institute has been one of many to note that discretionary spending growth is increasingly skewed toward higher-income households. And discretionary categories matter, the researchers wrote, because these are \u201camong the clearest indicators of the health of consumer spending<\/a>.\u201d<\/p>\n \u201cAs long as affluent consumers keep opening their wallets, inflation could stay stubbornly sticky,\u201d they added.<\/p>\n How Inflation Could Depend on America\u2019s Big Spenders<\/p>\n With richer households accounting for an increasingly large share of discretionary spending\u2014from restaurants and travel to luxury goods and entertainment\u2014inflation is no longer being driven equally by all consumers. As a result, wealthier Americans\u2019 behavior can have an outsized influence on overall demand.<\/p>\n This is symptomatic of the “K-shape<\/a>” economists have observed developing in the economy, with richer Americans thriving and spending as lower-income households pull back. With caution among the latter group balanced by continued spending by higher-income households, demand is expected to remain elevated, reducing any pressure on businesses to lower prices and, in certain sectors, giving scope to raise them.<\/p>\n If wealthy Americans continue to spend despite higher interest rates and rising prices, inflation could prove more persistent than expected\u2014even as many lower-income households struggle with affordability.<\/p>\n Read More on U.S.<\/p>\n Inflation Expected to Fall Amid Iran War Negotiations<\/p>\n In a speech following the central bank\u2019s June interest rate decision, Federal Reserve Chair Kevin Warsh recognized that inflation was elevated in large part due to the \u201csupply shocks\u201d caused by the Iran war.<\/p>\n However, oil prices and domestic fuel costs, which drove much of the increases in recent inflation reports, have been dropping sharply in recent weeks<\/a> amid negotiations between the U.S. and Iran and a recovery in flows out of the Strait of Hormuz.<\/p>\n Speaking at a European Central Bank Forum in Portugal last week, Warsh said that inflation \u201crisks\u201d and expectations \u201chave come down,\u201d though he reiterated the central bank\u2019s long-term 2 percent target.<\/p>\n Contact Newsweek editors on this story: Dan Orton<\/a> and Sam Wilson<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"The U.S. economy is increasingly characterized by a split between its affluent spenders and the struggling rest, a…\n","protected":false},"author":3,"featured_media":920638,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[12],"tags":[64,29548,79,92159,266,16795,14230,67,132,68],"class_list":["post-920637","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-department-of-labor","tag-economy","tag-freemium","tag-inflation","tag-spending","tag-u-s-economy","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116883878497360615","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/920637","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=920637"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/920637\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/920638"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=920637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=920637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=920637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"A](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2026\/07\/GettyImages-2263925949.jpg\"\/)
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