America’s economy and stock market continue to expand, driven by robust consumer spending and booming AI investments.
Yet, many Americans feel left behind. Hiring has stalled, inflation is rising, loan defaults are up, and public confidence in the economy remains near record lows.
Economists refer to this divide as a “K-shaped” economy, where wealthy households spend as they please while lower-income families tighten their budgets.
Chipotle’s latest earnings reflect this strain. The fast-food chain reported weak sales and cut its growth forecast for the third straight quarter. Its core customers—young and lower-income consumers who make up 40% of sales—are skipping extras like guacamole and opting for groceries instead.
In contrast, affluent Americans are spending freely. Crocs CEO highlighted strong demand from “highly affluent” buyers, while Coca-Cola reported booming sales of premium brands, such as Smartwater and Fairlife.
Fed Chair Jerome Powell noted that top earners benefit from rising stock prices and home values, while lower-income workers face stagnant wages and rising living costs.