U.S. Consumer Spending Trends and Economic Divide

This report discusses the diverging economic fortunes of U.S. households, particularly highlighting the K-shaped recovery pattern observed in consumer spending, wealth gains, and labor market outcomes. It outlines how upper-income households have benefited from robust wage growth and strong equity market gains, while lower-income households have faced challenges, including reduced access to consumer credit and a slowdown in wage growth. The report also details the impact of the One Big Beautiful Bill Act (OBBBA) tax cuts, which are expected to further entrench the economic divide by disproportionately benefiting higher-income households. Despite these disparities, overall consumer spending has remained resilient, supported by factors such as lower interest rates and higher tax refunds. The report includes various charts illustrating trends in consumer spending and wealth distribution among different income groups, emphasizing the ongoing challenges faced by lower-income households amidst a recovering economy.