Upper-income earners fuel consumption growth
October 29, 2025
Consumption in the US has remained remarkably resilient in 2025, despite the deceleration in overall income growth. The key factor behind this believes Portfolio Strategist Garrett Melson is the upper-income consumers’ growing net worth, healthy cash yields1, and surging Investment portfolio values. “While there are indeed strains on lower-income earners, upper-income consumers drive the bulk of consumer spending, providing a strong floor beneath consumption growth,” said Melson.
- The current environment is lending some support to the idea that wealth effects are fueling more robust consumption than labor market and income trends would suggest.
- There are growing strains on lower-income consumers due to inflation, government spending cuts, and tariffs.
- However, the lowest quintile of consumers by income drive less than 9% of aggregate consumption in the US, while the bottom 40% of consumers drive just over 21% of spending.*
- It may require more than a linear softening in labor markets to derail robust spending patterns of the top 10% income earners.
* Natixis Portfolio Analysis & Consulting, Bloomberg
1 Cash yields refer to the earnings from cash investments, such as high-yield savings accounts and money market funds.
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