Consumer spending resilience is not broad-based. It's largely driven by the top 10% of income earners (making over $275k), who now account for almost 50% of total spending. This is the only cohort whose spending has outpaced inflation since the pandemic, making the wider economy highly sensitive to their behavior.

Unlike 2022, when stimulus savings allowed consumers to absorb price hikes, the financially depleted middle class now lacks the ability to pay more. This forces them to push back on price increases, creating significant consumer resistance that acts as a powerful, albeit painful, check on a new round of inflation from tariffs or other cost pressures.

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.

There are two distinct economies operating simultaneously. Those with a capital base (equities, real estate) can use financial engineering and leverage to thrive. Meanwhile, individuals relying solely on wages are being crushed by inflation, as their income fails to keep pace with rising costs.

Despite official CPI averaging under 2% from 2010-2020, the actual cost of major assets like homes and stocks exploded. This disconnect shows that government inflation data fails to reflect the reality of eroding purchasing power, which is a key driver of public frustration.

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.

Analysis reveals a heavy concentration of spending at the top: the highest decile of income earners is now responsible for 49.2% of all personal outlays. This makes the overall US economy highly dependent on the financial health and confidence of a very small, affluent segment of the population, increasing systemic risk.

Headline GDP figures can be misleading in an environment of high immigration and inflation. Metrics like per-capita energy consumption or the number of labor hours needed to afford goods provide a more accurate picture of individual well-being, revealing that many feel poorer despite positive official growth numbers.

Despite strong GDP and corporate profits, productivity gains are eliminating lower-skilled jobs. BlackRock's Rick Reeder warns this is creating a social problem where aggregate consumption looks healthy, but a segment of the population is being left behind, a dynamic he calls a "travesty."