Wealthy consumers are driving spending growth in the US, while lower-income earners are cutting back on discretionary expenses. According to first-quarter results from major credit card lenders, American Express and JPMorgan Chase saw a 6% and similar 5% increase in spending respectively, compared to a 4% decline at Synchrony.
The disparity in spending habits is evident among the US population, with lower-income earners focusing on essential purchases while the wealthy continue to splurge on luxury items such as dining out and travel. This trend has been observed despite concerns about inflation and potential economic downturns.
American Express reported a 7% increase in dining expenses and an 11% rise in first-class airfare, indicating that high-end consumers are less affected by tariffs and price increases. Synchrony CEO Brian Doubles attributed the decline to lower-income card users who have been “tapering their spend” on discretionary items due to inflation.
The split between high- and low-income spending has significant implications for the credit industry and consumer behavior. As one analyst noted, the “high end has held up better, and the low end has pulled back more.” This trend may boost spending in the short term but could lead to weaker demand in the future as consumers become more cautious about their expenses.
The Federal Reserve Bank of Philadelphia data showed that 11.1% of credit card users made only minimum monthly payments in the fourth quarter, the highest level in 12 years. Bread Financial’s CEO Perry Beberman warned that this shift towards essential purchases could lead to a reevaluation of spending habits, as consumers consider whether they will still purchase big-ticket items like electronics or home furnishings when inflation rises.
Source: https://www.cnbc.com/2025/04/28/wealthy-consumers-spend-rest-of-america-cuts-back.html