The split screen: There’s a growing divide between affluent consumers and everyone else.

• Wealthy consumers keep splurging. Premium cabin bookings buoyed earnings at United Airlines and Delta Air Lines, while American Express CFO Christophe Le Caillec pointed to the “remarkable resilience across our customer base,” noting that restaurant spending was “very strong,” during the company’s earnings call.
• But many consumers are adjusting their behavior. Nearly half (45%) say tariffs are prompting them to cut back on nonessentials, and 30% are delaying big-ticket purchases, per Numerator’s Tariff Sentiment Tracker. These shifts are signs of growing economic anxiety among middle- and lower-income households.

Prices rise: No matter how you look at it, tariff rates are at generational highs. Consumers now face an effective average tariff rate of 20.6%—the highest since 1910, per the Yale Budget Lab. Adjusted for changes in consumption, that rate is still 19.7%, the highest since 1933.

• That’s why it isn’t surprising that 86% of consumers are concerned about the impact of tariffs on their personal finances or shopping habits, per Numerator. And that share could grow as tariffs manifest themselves as inflation.
• The effects of rising tariffs are beginning to ripple through consumer prices. In June, household furnishings jumped 1.0% MoM—their sharpest increase since 2022. Toy prices rose 1.8%, and major appliances surged 1.9% after a 4.3% spike in May. CNBC also reports recent price hikes on baby gear and home goods at Walmart, underscoring how tariff-driven inflation is starting to hit everyday essentials.
• Tariff headwinds are also hitting businesses. Tariffs have been cited in at least 10 US corporate bankruptcies since April, per Bloomberg. While not the sole cause, they’ve likely contributed to financial strain in an already challenging environment.

Uncertainty lingers: Consumers are growing more pessimistic.

• The University of Michigan’s preliminary July reading of consumer sentiment is 16% below December levels and well below historical norms.
• Until consumers see signs of inflation stabilizing—particularly if trade policies settle—confidence is unlikely to rebound, noted Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, adding that recent legislation like the tax and spending bill has done little to reassure households amid trade uncertainty.

Our take: It’s tempting to look at top-line numbers—like June retail sales—and assume the economy is holding steady. But much of the resilience is concentrated at the top. Moody’s estimates the wealthiest 10% of households—those earning $250,000 or more—now account for half of all US consumer spending, up from about one-third in the early 1990s. That dynamic helps explain why luxury brands like Burberry and RH continue to post gains, while value-focused chains like McDonald’s are seeing signs of softening demand.

As inequality widens and economic anxiety builds, especially amid persistent inflation and trade uncertainty, the US economy looks increasingly bifurcated.