"Higher-income Americans and those with college degrees have ramped up their spending more quickly in the past three years than other consumers, according to new data released Tuesday, evidence of worsening inequality that may explain some of the growing pessimism about the economy. The data, released by the Federal Reserve Bank of New York, also show that in the final three months of last year, lower-income and rural households faced higher inflation than higher-income households."
"The figures add support to the notion of a "K-shaped" economy, in which upper-income Americans are fueling a disproportionate share of the consumption that is the primary driver of the economy, while lower-income households see fewer gains. Poorer households in general often experience higher inflation, with a greater share of their spending being set aside for goods that have seen prices soar since the pandemic, things like housing, groceries, and utilities."
"The New York Fed's data show that households with incomes of $125,000 and higher have boosted their spending 2.3%, adjusted for inflation, since 2023, while middle-income households - those between $40,000 and $125,000 - have increased their spending by 1.6%. Those earning below $40,000 have lifted their spending by just 0.9%, the report showed."
Higher-income and college-educated Americans increased spending more quickly over the past three years, contributing to widening inequality and economic pessimism. New York Fed data show lower-income and rural households faced higher inflation in the final quarter of last year. The spending measure covers goods excluding autos and omits likely higher-income spending on travel, restaurants and entertainment. The pattern resembles a K-shaped economy, with upper-income households fueling disproportionate consumption while poorer households experience higher inflation on essentials like housing, groceries, and utilities. Data come from 200,000 consumers tracked by the analytics firm Numerator and align with monthly retail sales.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]