divergence between the haves and the have-nots<\/a> has been growing over a longer period of time, particularly in relation to a core component of the American Dream: homes.<\/p>\n\u201cYou break down CPI [consumer price index] inflation, where the pressure is, where things are easing off, and the signs there suggest to me that rich people are doing great; poor people aren\u2019t doing very well at all,\u201d he explained. \u201cHow do I see that?\u00a0You look at the shelter component of CPI, which is both indirectly and directly a measure of rent rather than home prices. Shelter has long been a thorn in the side of the inflationary outlook for a very long time.<\/p>\n
\u201cThat shelter inflation is coming from the fact that the housing stock is in short supply.\u00a0People cannot afford to buy homes, so they\u2019re forced into the rental market instead. There are a lot of people out there who can no longer afford perhaps the most quintessential component of the American Dream, which is property ownership. So they\u2019re being forced to rent, and it\u2019s showing up in prices.\u201d <\/p>\n
Outlook for 2026<\/p>\n
Where Goldman can align with the K-shape outlook is in its view of 2026. The factors that have helped consumers keep their heads above water in the face of tariff price rises and oil inflation, to name a few\u2014such as the One Big Beautiful Bill Act and tax refunds\u2014aren\u2019t frequent boosts to spending.<\/p>\n
\u201cWhat originally appeared to be a solid year for consumer spending has quickly become more challenging,\u201d wrote Mericle\u2019s colleagues Ronnie Walker, Alec Phillips, and Joseph Briggs in a note earlier this week.<\/p>\n
\u201cHigher gasoline prices disproportionately weigh on the spending of households in the lowest income quintile\u2014who spend roughly four times as much on gasoline as a share of after-tax income compared with those in the top quintile\u2014and spending on discretionary categories, such as restaurants.\u201d<\/p>\n
The trio forecast weak consumption growth over the coming months, leading to a 1% decline in headline retail sales. <\/p>\n
\u201cWe continue to expect underperformance for the bottom income quintile, reflecting tepid job growth, cuts to Medicaid and SNAP benefits, and now greater exposure to the increase in gasoline prices,\u201d the Goldman economists added. \u201cWe expect notably firmer income growth among middle and higher income quintiles, which are less exposed to the oil shock and accrue greater benefit from last year\u2019s fiscal package.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Despite the consternation around the K-shaped economy, Goldman Sachs\u2019 chief U.S. economist is of the opinion that rumors…\n","protected":false},"author":2,"featured_media":629342,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,6016,21964,21375,164,5465,19136],"class_list":{"0":"post-629341","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-consumer","12":"tag-consumer-prices","13":"tag-consumer-spending","14":"tag-economy","15":"tag-inflation","16":"tag-oil"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/629341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=629341"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/629341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/629342"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=629341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=629341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=629341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}