America’s economy is living a split-screen moment — one of prosperity and pressure. The wealthy are still spending freely, fueling an illusion of resilience in the headlines. But beneath the surface, lower-income households are tightening their belts, feeling the strain of stubborn inflation and a cooling job market.

The great divide: The top 10% of US households now account for nearly half of all consumer spending — the highest share since the late 1980s. That imbalance is playing out across the economy. Both United and Delta Air Lines say their premium cabins are packed with affluent travelers, even as budget seats go empty. McDonald’s CEO noted a double-digit drop in visits from low-income customers, warning that the split consumer base is a red flag for the economy’s health. Even dollar stores are feeling the squeeze, as wealthier shoppers trade down to save, while their core customers are simply running out of room to cut.

• Bank of America found that spending by the wealthiest third of households rose 2.6% in September compared to last year, while the poorest third saw spending increase just 0.6%.
• Wages tell the same story — the highest earners saw pay jump 4% year-over-year, while the lowest earners got raises of just 1.4%, failing to keep pace with inflation.

The Illusion of Stability

The economy’s foundation is showing signs of strain. According to the Institute for New Economic Thinking, between 2020 and 2023, the wealthiest Americans gained over $21T as markets soared. That surge kept their spending strong and propped up the consumer economy even as prices climbed. Most households didn’t share the boom — real wages fell, forcing many to rely on credit cards and cut back to essentials. This “wealth effect” has kept the economy looking strong on paper but masked how fragile it really is.

• Trump’s tariffs are squeezing small businesses, forcing owners to slash costs, take on debt, and halt growth — a warning sign economists say could signal broader economic trouble.
• The unemployment rate remains relatively low at 4.3%, but nearly 2M Americans are considered long-term unemployed — the highest since the pandemic.

No margin for error: Boston Fed researchers warn that the system’s stability depends on a narrow slice of consumers, leaving growth vulnerable to sudden shocks. Any dip in confidence or market pullback could quickly spread across sectors already stretched thin. As financial cushions shrink and borrowing costs stay high, resilience feels more like momentum on borrowed time.