- U.S. spending is splitting into a two-tier pattern, with higher-income consumers holding up demand while lower- and middle-income households cut back or trade down under cost pressures.
- McDonald’s and Coca-Cola report widening income-based gaps, including a nearly double-digit traffic drop among low-income customers alongside gains from higher-income patrons.
- Value-seeking is rising across all income levels, pushing brands and retailers toward sharper segmentation between value offerings (discounts, private label) and premium experiences while managing margin risk.
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Recent earnings reports and consumer data reveal a pronounced “two-tier” economy in the United States, where rising income inequality is putting pressure on lower- and middle-income households to adjust their consumption patterns. Companies across fast food, beverages, and retail are witnessing divergent trends: discretionary spending among affluent consumers remains relatively resilient, whereas lower-income segments are pulling back due to inflation, rising costs of living, and sluggish real wage gains.
Fast-food giants such as McDonald’s have publicly acknowledged the strain. CEO Chris Kempczinski reported a significant traffic drop among low-income consumers (“nearly double digits”), coupled with an uptick in visits from higher-income patrons. In response, McDonald’s is reviving value-focused items—“Extra Value Meals,” snack wraps priced under $3, etc.—to stabilize demand. Beverage companies such as Coca-Cola are echoing this sentiment, noting “divergency in spending between the income groups,” particularly during recent quarters.
Retailers are similarly adapting. Value‐oriented chains and discount grocers like Walmart, Aldi, TJX Companies are seeing stronger performance from both low-income consumers seeking savings and higher-income shoppers re-evaluating costs. Private labels and store brands are gaining acceptance even among consumers who previously prioritized name brands. Brands that lean premium or fast-casual (e.g., Sweetgreen, Cava, Chipotle) are experiencing a sharper decline in lower-income segments.
Strategic implications for companies include the need to maintain dual tracks: strengthen value propositions (discounts, value combos, private labels) while preserving premium product lines and brand equity. Marketing strategies need to be segmented by income. Cost containment becomes critical: price discipline, managing promo spend, controlling costs without alienating core customers. Financial risks include margin erosion among lower-income driven product lines, and demand volatility as consumer income trends shift.
Open questions include: How persistent is the “two-tier” consumer behavior? Will higher‐income stress (e.g., credit delinquencies, inflation exposure) soften their spending long‐term? What regulatory or policy interventions (e.g., on SNAP, minimum wage, price controls) might influence the environment? And how will supply chain, commodity cost, and inflation dynamics evolve in 2026?
Supporting Notes
- McDonald’s CEO Christopher Kempczinski stated that traffic among low-income consumers dropped “nearly double digits,” while traffic among higher-income consumers increased “nearly double digits” in the same period.
- Coca-Cola COO Henrique Braun observed “divergency in spending between the income groups,” confirming that pressure persists on middle- and low-end consumers.
- EMARKETER/LendingTree data from April 2024 show that 71% of consumers with household incomes under US$30,000 now view fast food as a luxury; under one-third of those earning more than US$100,000 felt the same way.
- Deloitte research finds that about 40% of U.S. consumers are value seekers; notably, 23% of consumers earning over US$200,000 fall into this group—signaling value focus even among wealthy households.
- Consumer Edge data show that many apparel and footwear brands (e.g., Adidas, SKIMS, Revolve) are increasingly targeting or relying upon higher-income shoppers, while value retailers gain market share.
- Retailers like Walmart report stronger-than-expected sales partly because of expanding appeal to affluent shoppers, while also noting that lower-income shoppers are cutting discretionary spending.
- The top 10% of earners in the U.S. are estimated to control nearly 49.2% of total consumer spending in Q2 2025.