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Another index measured daily by Morning Consult shows that middle-class consumer confidence fell sharply in the summer months. Higher-income Americans (earning more than $100,000 annually) have maintained relatively positive views on the economy all year, while lower-income consumers (earning under $50,000) have consistently held more negative views.
Middle-income earners (earning between $50,000 and $100,000) were tracking the buoyant sentiments of high earners through most of the year. However, in June, middle-class confidence took a significant hit. The index for middle-income earners slipped from 113.2 to 99.5 that month.
Economists attribute this shift to a combination of factors including inflation, which accelerated this summer after punishing consumers over the past three years; President Donald Trump’s tariff campaign, which could push prices higher; and the nation’s softening job market.
During an August earnings call with Walmart CEO Doug McMillon, he noted that “more adjustments” in spending were observed among middle- and lower-income households compared to high-income consumers. Similarly, Kohl’s interim CEO Michael Bender reported that their lower-to-middle-income customers remain the most challenged, trading down to cheaper goods.
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These trends are also evident in the rise of middle-income shoppers visiting dollar stores. Dollar General’s CEO highlighted this trend during a late-August earnings call.
Despite these economic challenges, upper-income Americans are flourishing. The top 10% of earners now account for more than 49% of all consumer spending, according to Mark Zandi, chief economist at Moody’s Analytics. These high earners benefit enormously from the rise in asset values across various markets including stocks and real estate.
Middle-income households also benefit from the stock market but to a lesser extent, as many are not invested at all. According to Lindsay Owens, executive director of the Groundwork Collaborative, “a huge percentage of Americans aren’t in the market at all.” This results in a two-tiered economy where the very top earners are doing exceptionally well while others struggle.
The unemployment rate is drifting up and job openings have been falling steadily. This reliance on upper-income consumers for economic stability means that if stock prices were to fall, high-income spending could decline rapidly, potentially impacting the broader economy.
