The consumers powering U.S. economic growth are increasingly those who are higher up the income ladder and likely enjoying a wealth effect from asset-price gains, according to research by Federal Reserve economists.
In the two pre-pandemic years, average household consumption was growing at a similar pace across all income groups, the new Fed study of retail spending shows. But since then, spending patterns have diverged sharply.
In the initial Covid period through mid-2021, low-income households increased spending faster than others with the help of public stimulus programs. But their consumption fell back after the last pandemic checks went out, while middle- and especially higher-income Americans have powered ahead. Overall, since the start of 2018, high-earning households raised spending more than twice as much as the low-income group.
The consumers powering US economic growth are increasingly those who are higher up the income ladder, according to research by Fed economists https://t.co/ypEjW5Buyz
— Bloomberg Economics (@economics) October 11, 2024
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