Cracks are starting to appear in the resilient spending of U.S. households, a key factor that has been keeping the economy afloat and out of a recession. Despite a seemingly healthy economy overall, lower-income consumers are feeling the strain as inflation rises and interest rates go up.
Big consumer goods companies like PepsiCo and Kraft Heinz have noted the challenges faced by their lower-income customers, who are struggling to cope with the higher costs of goods and services. Companies like Tyson Foods have observed a shift in consumer behavior, with lower-income households moving away from dining out and opting for more affordable meal options at home.
The trend of lower-income consumers cutting back on spending at restaurants and convenience stores while higher-income earners increase their spending on travel and entertainment is becoming more prominent. This shift in consumer behavior could be an early indicator of economic challenges ahead.
While much of the recent commentary has come from food and drink companies, other retailers like Walmart and Dollar General are expected to report their findings on how lower-income Americans are faring financially in the coming weeks. The impact of higher prices and changing consumer preferences is being felt by households across income levels, prompting businesses to adjust their strategies to appeal to more cost-conscious consumers.
