Top 10% of Earners Drive May Spending as US Inflation Hits 3-Year High
Updated
Updated · Newsweek · Jul 7
Top 10% of Earners Drive May Spending as US Inflation Hits 3-Year High
1 articles · Updated · Newsweek · Jul 7
Summary
May consumer spending accelerated even as U.S. prices rose at their fastest pace since April 2023, reinforcing signs that inflation remains sticky.
Bank of America researchers said the top 10% of earners now spend at least as much as the bottom 40% across major categories and almost as much as the bottom 70% on discretionary items.
That concentration leaves affluent households exerting outsized influence on demand, helping keep restaurant, travel, luxury and entertainment spending firm while lower-income consumers pull back.
Fed Chair Kevin Warsh has tied much of the recent inflation surge to Iran-war supply shocks, but falling oil and fuel prices amid U.S.-Iran talks and recovering Strait of Hormuz flows have eased inflation risks.
The May 2026 inflation report revealed a sharp surge in prices, creating major challenges for both markets and policymakers. As the Federal Reserve debates its next move on interest rates, investors are watching closely for signs of concern about rising inflation. A key driver behind this inflation is the rapid growth of artificial intelligence, which has led to a boom in data centers and a significant increase in electricity demand across the United States. This higher demand is pushing up electricity prices for households nationwide, highlighting how new technology can add unexpected pressures to the economy.