"income‑based divergence in spending and wage growth persists, and we are concerned that a 'K' shape is opening up between higher-income households and middle-income households, alongside the existing gap with lower-income households."
"A similar pattern is emerging in after-tax wage growth, with the gap between higher- and middle-income households at its largest in nearly five years,"
"While higher-income households' wage growth was 3.7% YoY in January, a solid improvement from the 3.3% YoY in December, middle-income families' wage growth saw only a marginal improvement, increasing to just under 1.6% YoY in January from over 1.5% in December."
Income-based divergence in spending and wage growth persists, with a widening gap between higher- and middle-income households alongside the existing gap with lower-income households. In January, higher-income households' year-on-year spending growth on credit and debit cards rose 2.5%, middle-income households were relatively flat at 1%, and lower-income households increased just 0.3%. Spending growth between higher-income households and all others was the largest since mid-2022. After-tax wage growth shows a similar pattern: higher-income households' wage growth was 3.7% YoY in January (up from 3.3% in December), while middle-income families' wage growth rose only to just under 1.6% YoY from over 1.5%. The pattern indicates the middle class is separating from lower-income households, creating an emerging E-shaped income divide.
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