Consumers are adjusting their spending habits due to concerns about a recession, the government shutdown, and tariff uncertainty. There are 2 “camps” of people… The wealthy are continuing to spend, as they are being bolstered by stock market gains and increasing home values. Middle and low-income households are being forced to pull back on discretionary spending, along with essentials like gas and groceries.
In response, companies are expanding both their premium offerings and value options. Some examples include Coca-Cola, which does both, while McDonald’s and Chipotle focus on value since lower-income traffic was declining. High-end hotel and airline companies are benefiting, while the budget brands are falling. The delayed CPI report will give clarity on inflation pressures and cost-of-living adjustments.
Neelakandan, L. (2025, October 23). 'K-shaped' spending: Here's which sectors are showing bifurcation. CNBC. https://www.cnbc.com/2025/10/23/k-shaped-spending-sectors-showing-bifurcation.html
2 comments:
The "K-shaped" spending trend really highlights how uneven the current economy is. It's interesting how the same conditions, like tariffs and inflation, can hurt one group while barely touching another. The shift in company strategies makes sense, but it also shows how divided consumer markets have become. If this continues, we'll likely see an even sharper split between luxury and budget industries, with less room for middle-tier businesses to compete.
I was also going to mention this. Our country is going through a lot right now, and depending on the social status, groups of people are having very different experiences. It also does not help that delayed // shut down institutions aren't getting their numbers and reports out, which leaves everyone in a state of uncertainty. I'm not sure where things are going from here, but I am very curious to see.
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