The K-Shaped Consumer Isn’t Spending Less. They’re Getting Pickier

Higher prices are forcing shoppers to make tougher choices, and the brands that survive are the ones that clearly define the problem they solve.

EXPERT OPINION BY AMY ZWAGERMAN, BRAND AND AI STRATEGIST

Consumer spending in the US grew at an annualized rate of 3.4 percent in the second quarter of this year. At the same time, consumer sentiment declined 13.4 percent over the prior quarter, reaching a record low.

Economists are calling it a K-shaped market: higher-income households are spending more while lower-income households are pulling back on anything that isn’t essential. Fifty-three percent of Americans now budget formally, up from 46 percent a year ago. The consensus read is that the middle is getting squeezed: luxury is fine, discount is fine, and everything in between is in trouble.

The squeeze isn’t about how much money a person has or pricing tiers. It’s about what happens when prices grow faster than the........

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