The wealthy ramp up spending while other Americans tread water, new study finds

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The wealthy ramp up spending while other Americans tread water, new study finds

2026-02-04 01:13 Last Updated At：13:18

WASHINGTON (AP) — Higher-income Americans and those with college degrees have ramped up their spending more quickly in the past three years than other consumers, according to new data released Tuesday, evidence of worsening inequality that may explain some of the growing pessimism about the economy.

The data, released by the Federal Reserve Bank of New York, also show that in the final three months of last year, lower-income and rural households faced higher inflation than higher-income households. The spending data focuses only on goods excluding autos, and does not capture likely spending by higher-income households on travel, restaurants and entertainment.

The figures add support to the notion of a “K-shaped” economy, in which upper-income Americans are fueling a disproportionate share of the consumption that is the primary driver of the economy, while lower-income households see fewer gains. Poorer households in general often experience higher inflation, with a greater share of their spending being set aside for goods that have seen prices soar since the pandemic, things like housing, groceries, and utilities.

The New York Fed's data show that households with incomes of $125,000 and higher have boosted their spending 2.3%, adjusted for inflation, since 2023, while middle-income households — those between $40,000 and $125,000 — have increased their spending by 1.6%. Those earning below $40,000 have lifted their spending by just 0.9%, the report showed.

The figures are an addition to the New York Fed's economic heterogeneity indicators, a series of data sets intended to track variations in the economy by geographic region and demographic and income groups. The goal is to get a better sense of how different groups are faring, trends that can be shrouded by nationwide averages.

The figures are derived from a group of 200,000 consumers tracked by the analytics firm Numerator. Their data closely tracks monthly retail sales released by the government, the New York Fed said.

The report underscores a pattern that has emerged since the pandemic: Lower-income households fared better in 2021 and 2022 when companies were desperate to hire and willing to pay, while the government also provided several economic stimulus checks. Yet beginning roughly in early 2023, hiring slowed and sharp gains in stock market fueled spending gains in wealthier households.

The division is also clear when examined through the lens of education. In 2023 and most of 2024, inflation-adjusted spending by non-college households fell below its January 2023 level. It only regained that level in November 2024, while households with a college graduate had by then boosted their spending by 4%.

The New York Fed notes that college-educated households continued to spend at a rapid pace in 2025 even as hiring slowed and there were a spate of job cuts in white-collar industries such as high tech, government and marketing.

“The difference in the trend in retail spending between college graduates and nongraduates is consistent with the story of a ‘K-shaped economy,’” Rajashri Chakrabarti, an economic research advisor at the New York Fed, and three colleagues wrote.

The findings echo other recent research, including a short paper by the Federal Reserve Bank of Dallas last November. The Dallas Fed found modest increases in consumption and income inequality over the past three decades. The wealthiest one-fifth of Americans accounted for about 54% of earnings from 1990-99, the researchers found, a figure that had risen to 60% in the 2020-2025 period. The proportion of spending by the richest one-fifth increased to 57% from 53% between those two periods, the Dallas Fed concluded.

Jürgen Klopp named new Germany coach with eyes on 2030 World Cup

Germany has hired Jürgen Klopp to coach its national team, giving the ex-Liverpool manager a daunting task to turn around the fortunes of a squad which failed yet again at the World Cup.

Klopp signed a contract to coach Germany through to the 2030 World Cup. Speaking shortly after the announcement Friday, he told a news conference in Frankfurt it was “a big honor” to take the job and signaled it could be his final role as coach.

“Jürgen Klopp has no career after the national team,” he said. “Ideally, this will be the highlight of my career, my life, my working life. I will put everything into it that I possibly can.”

He replaces Julian Nagelsmann, who resigned amid heavy criticism after Germany’s loss to Paraguay meant it failed to reach the last 16 of a men’s World Cup for the third time in a row.

It is Klopp’s first coaching job since he left Liverpool in 2024 citing fatigue. He said he was “recharged” in comments while in talks over the Germany job.

Klopp signaled he plans to make some surprising squad selections and said his mission isn't just to win games, but to bring back a buzz around the team.

Klopp himself admitted that “it's been a while” since he watched national team games outside of major tournaments.

“I want to create something with the national team that means that people go home after the game and think ‘That was really cool.’ That's what I'd like to see happen,” he said.

Klopp said Friday he would be prepared to leave without any severance pay if it doesn’t work out, and threatened to resign if the media doesn’t “leave my family in peace.”

The man known for thrilling “heavy metal football” at Liverpool, Klopp was Germany’s preferred candidate as soon as Nagelsmann quit.

Over weeks of talks, the 59-year-old German — 20 years older than Nagelsmann — stayed in the United States as a World Cup pundit for a German-language broadcaster.

The federation also held talks with the Red Bull group, where Klopp spent the last year and a half as “head of global soccer” advising its worldwide group of soccer clubs.

German federation president Bernd Neuendorf said there wouldn’t be a typical release fee paid to Red Bull for Klopp. Instead, the federation pays one million euros ($1.14 million) to a Red Bull-linked charity and has agreed to hold three national team games in the eastern city of Leipzig, where Red Bull backs the city’s Bundesliga club team.

Klopp faces a tough introduction to his first national team job with four Nations League games in 11 days against the Netherlands, Greece and Serbia in late September and early October. The first major milestone will be the 2028 European Championship.

Germany hasn't won a knockout game at a World Cup since beating Argentina in the 2014 final. Now a player from that team will be working alongside Klopp.

Former defender Per Mertesacker joins Klopp as the federation's new managing director for sport, with a role overseeing the German men's national teams and an emphasis on bringing players through youth national teams to star for the senior team. He will start the role in January and joins after eight years running Arsenal's academy.

Klopp is reunited with two of his assistants from his Liverpool days, Peter Krawietz and Pep Lijnders, weeks after Lijnders left a role as Pep Guardiola's assistant at Man City. Ex-Germany player Sven Bender also takes an assistant role.

In an unusual arrangement, Klopp's longtime agent Marc Kosicke joins the coaching team in a role focusing on strategy and administration, but won't be a federation employee.

AP soccer: https://apnews.com/hub/soccer