By most measures, Americans are feeling good about the economy. A monthly gauge of consumer confidence is at a 17-year high. The unemployment rate is at a 17-year low. The stock market continues to hit all-time peaks, while gas remains relatively cheap.
That optimism is expected to help boost holiday shopping sales by as much as 4 percent this year, according to data from the National Retail Federation. The trade group projects Americans will spend a record $682bn this year.
But there are signs that the optimism may be limited to high-income Americans. Data show that lower-income households are likely to pull back on holiday spending this year and, in many cases, that their economic outlook isn't as rosy as it was earlier this year. Wages have remained largely stagnant, particularly in lower-paying jobs, and many are on edge over news reports suggesting changing tax policies will disproportionately hurt lower- and middle-income families, according to Doug Hermanson, an economist for the consultancy Kantar Retail. Proposed government cuts to food stamps and other supplemental programs also are expected to burden lower-income families.
"We're starting to see a widening bifurcation," Hermanson said. "When you look at where the big spending is coming from — home improvements, for example — it's very wealth-driven. Spending plans are largely unchanged overall, and that's particularly the case among middle- and low-income households."
Timely, incisive articles delivered directly to your inbox.