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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, 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 data shows 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 shows.
The figures are an addition to the New York Fed’s economic heterogeneity indicators, a series of data sets intended to track variations in the economy by geographic region and demographic and income groups. The goal is to get a better sense of how different groups are faring, trends that can be shrouded by nationwide averages.
The figures are derived from a group of 200,000 consumers tracked by the analytics firm Numerator. Their data closely tracks monthly retail sales released by the government, the New York Fed says.
