{"id":264618,"date":"2025-11-01T09:05:12","date_gmt":"2025-11-01T09:05:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/264618\/"},"modified":"2025-11-01T09:05:12","modified_gmt":"2025-11-01T09:05:12","slug":"high-income-spenders-are-propping-up-the-economy","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/264618\/","title":{"rendered":"High-income spenders are propping up the economy"},"content":{"rendered":"

A slim slice of consumers in the top quintile of incomes is doing the majority of spending<\/a> in this economy.<\/p>\n

Apple\u2019s latest financial results<\/a> give us a glimpse into this phenomenon. After a couple years of lagging sales, the release of the iPhone 17 led to double-digit growth in iPhone sales in the last quarter. The retail price of that new phone: $799 dollars<\/a>.\u00a0<\/p>\n

This concentration of spending at the top<\/a> has been building for decades, driven by widening wealth inequality, said Kristina Sargent, an economist at Middlebury College.<\/p>\n

\u201cHigher earners have seen strong wage growth and massive gains in wealth from stock and housing. Meanwhile, middle- and lower-income households are squeezed by rising costs like rent and childcare, groceries, the basics,\u201d she said.<\/p>\n

This inequality has really shown up in spending the last few years, as consumers have grappled with inflation<\/a>.\u00a0<\/p>\n

And it’s changed the kinds of things<\/a> people in different economic classes buy, said Leo Feler at the consumer insight company Numerator.<\/p>\n

\u201cEveryone has kept buying food. Everyone has kept buying health and personal care items such as deodorant and soap and toothpaste,\u201d he said. <\/p>\n

But then, there\u2019s pretty much everything else \u2014 vacations, restaurants, discretionary goods.<\/p>\n

\u201cThis is going to include things like toys, electronics, sporting goods, apparel. This is where we really see a big pullback amongst lower-income consumers, and higher-income consumers have continued to spend,\u201d he said.<\/p>\n

The potential trouble with an economy propped up by the wealthiest is that a lot of them are feeling wealthy thanks to the stock market<\/a>, said Sargent<\/p>\n

\u201cSo if the stock market dips, that can ripple out really quickly, and the wealthier households make fewer big ticket purchases, we see slower demand and then knock-on effects for jobs,\u201d she said.<\/p>\n

It\u2019s like the economy is a table, balancing on just three legs, Sargent said. \u201cYou’re fine in good times, but it gets shakier as things turn to be a little bit less stable,\u201d she said.<\/p>\n

But Betsey Stevenson, an economist at the University of Michigan, said the concern that the wealthy might pull back in a downturn could be a bit overblown.\u00a0<\/p>\n

\u201cThe higher -ncome people tend to have savings as well as access to borrowing, and so they don’t change their consumption very much as their wealth moves around,\u201d she said.<\/p>\n

The real risk to a K-shaped economy, Stevenson said, is social and political instability.<\/p>\n

Related Topics<\/p>\n","protected":false},"excerpt":{"rendered":"A slim slice of consumers in the top quintile of incomes is doing the majority of spending in…\n","protected":false},"author":2,"featured_media":264619,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[517,28,16306,101,133896,138150],"class_list":{"0":"post-264618","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-apple","9":"tag-business","10":"tag-consumer-spending","11":"tag-economy","12":"tag-k-shaped-economy","13":"tag-wealth-inequality"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/264618","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=264618"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/264618\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/264619"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=264618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=264618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=264618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}