In brief
An Xinhua analysis of August retail data shows that affluent Americans continue to spend on discretionary purchases even as inflation spikes, while lower‑income consumers cut back and shop more at discount stores. Credit‑card data from American Express and airline revenues underscore the income‑based divide, and experts note that wage growth is stagnant. The picture illustrates how different income groups are responding to a high‑inflation economy.
Retail sales in the United States surged in August, but Xinhua reports the growth is largely confined to affluent households that are willing to spend on travel, dining and entertainment, even as inflation remains high.
The study points to a sharp distinction between the spending habits of the top‑earning one‑fifth of the population and the rest. "It’s a fact that overall consumer spending is being fueled by the one‑fifth or so who are best off," said Clay Ramsay, a researcher at the Center for International and Security Studies at the University of Maryland, in an interview with Xinhua. Ramsay added that lower‑earners are still buying the same goods, just at higher prices.
Retail Spending Patterns
Credit‑card data underline the trend. American Express, a major U.S. card issuer, reported a fiscal‑year third‑quarter revenue of 20.1 billion U.S. dollars, up 9 percent year‑on‑year, and card spending that rose 8 percent to 454 billion dollars. In the same quarter, travel and entertainment expenditures grew 10 percent, while airline spending climbed 13 percent and restaurant purchases rose 9 percent.
American Express’s demographic profile – "an affluent customer base," according to U.S. business magazine Forbes – explains why many high‑income consumers rely on credit for discretionary spend. Forbes highlighted the company's strong performance in travel and entertainment categories, noting that these sectors remain "resilient".
In addition to card data, airline revenue supports the view that upper‑income travel remains robust. American Airlines announced third‑quarter revenue of 16.3 billion dollars, a 19.3 percent jump from the same period a year earlier, underscoring sustained demand for domestic and international travel.
Conversely, discount retailers have benefitted from the shift toward lower‑priced goods. Dollar General and Dollar Tree both beat quarterly sales expectations in August as shoppers with more limited incomes turned to discount stores for daily necessities.
Despite the rising price level, wage growth has plateaued, a point emphasized by Dean Baker, a macroeconomist and co‑founder of the Center for Economic and Policy Research. Baker told Xinhua that "wage growth has hit a wall, despite elevated inflation," highlighting the squeeze felt by the broader middle and lower classes.
In summary, Xinhua’s analysis illustrates a widening divide in consumer behavior: the wealthiest households continue to drive retail growth through discretionary spending, while income‑constrained consumers seek bargains and save more. This pattern reflects the persistence of inflation and the uneven distribution of economic benefits across the American population.