Two Americas, one shopping cart
Bank of America’s economists just put a number on something a lot of people have been feeling: the U.S. consumer isn’t moving as one big herd right now. The top 10% of households are spending nearly as much on everything except essentials as the bottom 70% combined. That’s not a typo. That’s a giant gap with a credit card attached.
What that means for the economy
This is the kind of data that screams “K-shaped recovery” — or maybe “K-shaped everything.” On the upper arm of the K, higher-income households are still traveling, dining out, buying stuff, and generally behaving like inflation never got the memo. On the lower arm, the rest of the country is getting squeezed by higher prices, higher borrowing costs, and the general vibe of “do I really need this?”
For investors, that matters because consumer spending is the engine under a huge chunk of corporate profits. If the spending is concentrated among wealthier households, companies aimed at premium buyers may keep cruising while mass-market names have to work way harder for every dollar.
Why Wall Street cares
A few practical takeaways:
- Luxury and premium brands can keep getting support from affluent shoppers.
- Discretionary retailers and restaurants aimed at middle- and lower-income consumers may face more pressure.
- The overall economy can look sturdier than it really is if the top slice of earners is doing all the heavy lifting.
Big picture: when the rich are still acting like the economy is fine and everyone else is acting like a recession is hiding behind the couch, the averages can get wildly misleading. And markets love averages almost as much as they hate surprises.