Summary

Higher-income Americans have stepped up their spending faster than other consumers over the past three years, according to new data released by the Federal Reserve Bank of New York, a pattern the central bank said aligns with a “K-shaped” economy. The New York Fed’s analysis also found that inflation pressures late last year hit lower-income and rural households more than higher-income households.

The spending comparison uses inflation-adjusted figures for goods excluding autos and is intended to show how different groups are faring in ways that nationwide averages can mask. The New York Fed’s release cautioned that the spending data does not capture additional categories where higher-income consumers may be spending more, such as travel and entertainment.

In the New York Fed’s breakdown by income, households earning $125,000 and higher increased their spending by 2.3% since 2023, after adjusting for inflation. Middle-income households—defined as those earning between $40,000 and $125,000—boosted spending by 1.6%, while households making less than $40,000 raised spending by 0.9%.

The release also points to a late-year inflation divide, saying that in the final three months of last year lower-income and rural households faced higher inflation than higher-income households. The New York Fed linked those distributional gaps to a broader concern that consumer experiences are diverging by income and geography.

The report’s dataset comes from tracking by the analytics firm Numerator, using data derived from a group of 200,000 consumers. The New York Fed said its figures track closely with monthly retail sales released by the government.

The New York Fed’s release adds context that the pattern it documents has shifted since the pandemic. It said lower-income households fared better in 2021 and 2022 when companies were desperate to hire and when the government provided economic stimulus checks, but that the trend changed around early 2023 as hiring slowed and spending gains became more concentrated among wealthier households.

Education-level differences also appear in the New York Fed’s findings. The release said that in 2023 and most of 2024, inflation-adjusted spending by non-college households fell below its January 2023 level, and it did not regain that level until November 2024, while households with a college graduate had boosted their spending by 4% by then.

The New York Fed said spending among college-educated households continued at a rapid pace in 2025 even as hiring slowed and job cuts spread through white-collar industries such as high tech, government and marketing. Rajashri Chakrabarti, an economic research advisor at the New York Fed, and three colleagues wrote that the trend in retail spending between college graduates and nongraduates is consistent with the story of a “K-shaped economy.”

The New York Fed’s release said the new figures are an addition to the bank’s economic heterogeneity indicators, a series meant to track variations in the economy by geographic region and demographic and income groups. The report also drew on other recent research, including a short paper from the Federal Reserve Bank of Dallas that found increased inequality in earnings and spending shares across decades, including a higher share for the wealthiest one-fifth in the 2020-2025 period than in 1990-99.