U.S. Becoming a Tale of Two Economies

Oct. 25—Wealthier Americans, whose income has lifted by stock market gains, spend freely on travel, jewelry, and high-end experiences. Their consumption keeps economic indicators such as GDP and consumer spending looking strong. But, that strength is increasingly built on those spending habits of the top 10%, who now account for nearly half of all consumer expenditures—the highest share since the late 1980s, the New York Times reports.

The trend takes many forms: First and business class seats sell out on planes. Credit card companies are offering premium cards with mounting annual fees, some now reaching $795 or even more.

For the 90% majority, it is a different story. Inflation squeezes family budgets, hourly wage growth has slowed the most for lower-paid workers, and more families are relying on credit cards to stay afloat. If nonessential expenses have already been cast aside, how fragile are the majority of Americans in face of economic shocks? And for many of these families, the government shutdown will throw them into a dangerous tailspin. The shutdown does not just affect the millions of government workers and contract workers, but all those who service them, such as small contractors, cleaning companies and related such services are all now reporting serious drops in business.

In addition, the "lower 90%" have been hit by the effects of higher tariffs imposed by both the Trump administration and other countries, such as China. Sources close to the White House say that President Trump is considering a stimulus package, possibly before the end of the year, to offset these higher costs.