Spirit's troubles highlight a broader market trend where budget-conscious consumers cut back while the wealthy splurge on luxury. This pattern, once confined to goods, is now evident in services like travel, signaling a potential risk for other budget-focused businesses and an opportunity for luxury brands.

The resilience of consumer spending, despite weak employment growth, is driven by affluent consumers liquidating assets or drawing down cash. This balance sheet-driven consumption explains why traditional income-based models (like savings rates) are failing to predict a slowdown.

While high-income spending remains stable, the next wave of consumption growth will stem from a recovery in the middle-income segment. This rebound will be driven by stabilizing factors like reduced policy uncertainty and neutral monetary policy, not a major labor market acceleration.

Despite the best earnings season in four years for companies like Apple and Amazon, consumer brands like Chipotle, Shake Shack, and Crocs report slowing sales from 20-somethings. This demographic faces soaring unemployment and slowing wage growth, creating a hidden weak spot in an otherwise strong economy.

A conversation with a job candidate from an economics master's program revealed significant anxiety among peers about the difficulty of securing employment. This ground-level anecdote suggests the labor market is tightening even for highly educated, skilled workers, a concerning sign for the broader economy.

Despite a still-growing labor market, real wage growth has slowed to "stall speed." This lagged effect on middle and lower-income households is the primary driver for the projected 2-percentage-point drop in real consumption growth for Q4 and Q1.

A major disconnect exists between Wall Street and Main Street. While jobs data points towards a potential recession, the S&P 500 is hitting record highs. Since recessions are historically preceded by market downturns, investors are signaling a strong disbelief in the negative labor market signals.

Consumer spending patterns in the gaming sector act as a canary in the coal mine for the economy. When consumers feel financial pressure, the first cutback is on destination travel like Las Vegas. A more severe warning sign of a pervasive downturn would be a subsequent decline in spending at local, regional casinos.

The economy is now driven by high-income earners whose spending fluctuates with the stock market. Unlike historical recessions, a significant market downturn is now a prerequisite for a broader economic recession, as equities must fall to curtail spending from this key demographic.