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America's Two-Speed Economy: High Earners Spend On, Others Pull Back

  • Nishadil
  • October 01, 2025
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  • 3 minutes read
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America's Two-Speed Economy: High Earners Spend On, Others Pull Back

The landscape of U.S. consumer spending is undergoing a profound transformation, revealing a stark divergence between different income brackets. According to Naveen Jaggi of JLL, America is witnessing a 'two-speed economy' where the spending habits of affluent households remain robust, contrasting sharply with the significant pullback by lower and middle-income consumers.

This emerging trend signals a critical shift that has wide-ranging implications for the retail sector, real estate, and the overall economic outlook.

For millions of Americans in the lower and middle-income segments, economic pressures are mounting, forcing a reevaluation of spending priorities.

Persistent inflation, which has eroded purchasing power, coupled with rising interest rates that make borrowing more expensive, are key culprits. Many households have also depleted the savings buffers accumulated during the pandemic, and are now contending with escalating credit card debt. This confluence of factors means that discretionary spending is often the first to be cut, impacting everything from everyday goods to larger purchases and non-essential services.

The sentiment among these groups is one of caution and necessity, focusing on essential expenditures.

Conversely, higher-income households appear largely insulated from these challenges, maintaining or even increasing their spending. This demographic typically has greater disposable income, stronger balance sheets, and is less sensitive to the incremental price increases that significantly strain other groups.

Their spending is often directed towards experiences, luxury goods, high-end services, and travel, indicating a continued appetite for discretionary purchases that underscore a more confident economic outlook within their segment. This sustained expenditure helps to prop up certain sectors of the economy, masking the underlying struggles faced by a larger portion of the population.

The bifurcation of consumer spending presents a complex challenge for businesses.

Retailers and service providers primarily catering to the lower and middle-income markets are likely to face headwinds, experiencing reduced foot traffic and sales volumes. Conversely, brands and businesses targeting affluent consumers, particularly those in the luxury, experience, and high-end service categories, may continue to thrive.

This dynamic requires businesses to keenly understand their customer base and adapt their strategies accordingly, from inventory management to marketing and pricing.

Jaggi's analysis underscores a critical moment for the U.S. economy. While headline economic indicators might suggest resilience, a deeper dive reveals a fragmented reality.

The sustained spending power of the wealthy, while beneficial for certain industries, cannot fully offset the broader economic implications of a strained consumer base. This 'K-shaped' recovery necessitates careful monitoring from policymakers and businesses alike, as the health of the entire consumer ecosystem is vital for long-term economic stability and equitable growth.

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