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Wealthy U.S. Households Boost Spending While Poorer Families Face Rising Inflation

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NY Fed Data Shows Spending Gap Widening Since 2023 The New York Federal Reserve released data on Tuesday, Feb 3 2026, tracking 200,000 consumers via Numerator. Inflation‑adjusted spending rose 2.3 % for households earning $125 k + over the past three years, versus 1.6 % for $40k‑$125k and only 0.9 % for those below $40k, highlighting a widening gap between richer and poorer families. Faster growth among higher‑income, college‑educated consumers contrasts with slower increases for lower‑income households, underscoring divergent consumption trends. [1]

Lower‑Income Inflation Pressures Reduce Real Purchases In the final quarter of 2023, price gains on essential goods hit poorer families harder, eroding their real purchasing power. The spending metrics exclude auto purchases and omit higher‑income outlays on travel, restaurants, and entertainment, which further skews the gap. Rural households experienced the steepest inflation impact, according to the report, deepening regional disparities. [1]

Pandemic‑Era Shifts Deepen Consumption Inequality After the 2021‑22 stimulus, poorer families briefly increased spending, but hiring slowed in early 2023 while wealthier consumers benefited from stock‑market gains. Non‑college households fell below their Jan 2023 spending levels until Nov 2024, whereas college graduates stayed 4 % above that baseline and kept accelerating in 2025 despite white‑collar job cuts. Dallas Fed research shows the richest 20 % captured 60 % of earnings and 57 % of consumption in 2020‑25, up from the 1990s, mirroring the NY Fed’s consumption gap. [1]

Consumption Share of Top 20% Hits Record Levels short paper from the Dallas Federal Reserve confirms the top quintile now holds 60 % of total earnings and 57 % of total consumption, up from 54 % and 53 % respectively in the 1990s. This concentration mirrors the spending trends highlighted by the New York Fed, indicating that wealth concentration translates directly into consumption dominance. The findings suggest that rising inequality is entrenched in both income and spending patterns. [1]

Sources

Timeline

2020‑2025 – Dallas Fed research notes that “the richest 20 % captured 60 % of earnings (up from 54 % in the 1990s) and 57 % of consumption (up from 53 % in the 1990s),” highlighting a deepening income‑consumption gap [2].

2021‑2022 – Pandemic‑era stimulus and strong hiring boost lower‑income families, but the surge ends as hiring slows in early 2023, setting the stage for divergent spending trends [2].

Early 2023 – Labor‑market slackens, with hiring rates falling after the post‑pandemic boom, contributing to widening inequality in household finances [2].

Oct‑Dec 2023 – Lower‑income and rural households face higher inflation on essential goods, while spending data exclude autos and higher‑income outlays on travel and entertainment, widening the inflation‑burden gap [2].

2024 (through Nov) – Non‑college households dip below their Jan 2023 spending levels, reflecting the lingering impact of the early‑2023 hiring slowdown and rising price pressures [2].

2025 – The New York Fed reports that “higher‑income and college‑educated consumers outpace others,” raising inflation‑adjusted spending faster than other groups; college graduates are up 4 % and maintain rapid expenditure despite white‑collar job cuts, underscoring a persistent K‑shaped recovery [2].

Q3 2025 – US GDP expands at a 4.3 % annualized rate, the fastest growth in two years, driven largely by higher‑income consumer spending, record‑high real estate values, and strong stock returns, yet it does not translate into a hiring boom [1].

Nov 2025 – Consumer price index rises 2.7 % year‑over‑year, showing inflation remains elevated even as some categories soften, keeping cost‑of‑living pressures high for many households [1].

Nov 2025 – Wage gains remain uneven: high‑income households see real wage growth outpacing prices, while middle‑ and lower‑income earners experience slower gains, reinforcing income disparity [1].

2025‑2026 – Unemployment edges higher and job openings fluctuate throughout the year, indicating labor‑market weakness despite strong macroeconomic indicators [1].

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