Worried about a recession? Start rooting for the rich.

Money may not buy happiness, but it does buy stuff. And buying stuff is at the heart of our consumer-driven economic engine. Lately, it's wealthier people, in particular, who have been keeping that engine running. The better off don't love high prices, and they're feeling uncertain, but they're spending through it all — and everyone's increasingly dependent on them being able to keep going.

In the immediate postpandemic era, consumers across the income spectrum were spending like gangbusters. For many people, being stuck at home for months meant a lot of pent-up demand and cash to spend. But over the past two years, the consumer story has split in two.

Lower- and middle-income people have had to pull back and be more judicious with their spending amid inflation, increased interest rates, and the rising costs of budget mainstays such as rent, food, and gas. Higher-income people have been able to brush off those concerns, thanks to rising stock prices and a solid housing market.

"Higher-income families have been doing more than their fair share of spending," says Gregory Daco, the chief economist at EY-Parthenon.

Companies have picked up on this split: Walmart has said that high-income shoppers are boosting its sales. In its most recent earnings call, McDonald's executives said they are seeing a "divided" economy, with steep declines in traffic from low- and middle-income consumers while high-income visits remain solid.

"The wealthy, the well-to-do, are driving the economic train, yes, at this point," Mark Zandi, the chief economist at Moody's, tells me. "It's always the case, but to a greater degree now."

Just how drastic the split is among income groups is up for debate. An analysis from Moody's earlier this year, first reported by The Wall Street Journal, estimated that the top 10% of households, meaning those making $250,000 a year or more, accounted for half of all spending, compared with about one-third 30 years ago. In Daco's view, the Moody's analysis may somewhat overstate the bifurcation, but there's no denying that there's a bifurcation. He tells me that he sticks to the 60-40 rule, which says that the top 40% of income earners, so those making about $100,000 or more, "do about 60% of spending, and the bottom 60% do 40% of the spending." Daco tells me this is starting to shift. "We've seen that rise, that share for the top 40% rise to about 65%," he added.

Federal Reserve economists examined retail spending on goods last fall, using data from Numerator, a consumer data company. They found that middle- and high-income consumers were the ones keeping growth going while low-income spending had been stabler. This year, spending among low- and middle-income consumers has fallen off, while high-income consumers are maintaining their pace.

"It doesn't look like higher-income households have pulled back at all. It's pretty flat," says Leo Feler, the chief economist at Numerator. "When we look at the aggregate and we say, 'OK, well then aggregate consumers have still been going out and spending,' that aggregate really is driven by the higher-income households."

This is showing up in credit card spending data, too. As CNBC recently reported, Synchrony, which makes branded cards for everyday companies such as Walgreens and JCPenney, said it saw a 4% decline in spending during the first quarter of the year, while American Express and JPMorgan Chase, which target higher-end consumers, saw spending increases. Joe Wadford, an economist at the Bank of America Institute, said in an email that his firm's data showed higher-income households continued to spend at least through the middle of April, despite the stock market chaos. "In fact, our data shows that the top third and top 5% of households by income have seen no deterioration compared to overall spending growth," he said.

The conversation in many well-off circles — meaning upper-ish middle class and above — seems to be, "Gosh, everything is so expensive nowadays. Anyway, did I tell you about my last trip to Paris?"

Despite the rising tide of uncertainty, wealthier people have been up for spending through it for many reasons. They saved a lot during the pandemic because of stay-at-home orders. They've also seen their stock portfolios and housing values rise significantly. Despite this year's market woes, the S&P 500 is still up by 100% over the past five years. Home values have soared, and many homeowners were able to lock in lower mortgage rates a few years ago, which has helped them save on their monthly payments.

"Even though this isn't realized income in the sense that people aren't necessarily selling their stocks or cashing in on their home equity, they perceive themselves as being wealthier," Feler says.

Consumer spending has jumped in recent months, in part due to people trying to get ahead of tariffs and related price increases. Feler says it's likely wealthier consumers doing the spending — they're the ones with the extra cash on hand to be able to try to get ahead of tariffs.

"It's higher-income households that can suddenly drop $1,500 on a new TV and buy a new TV before prices go up. They can go out and put down $6,000, $7,000 on a brand-new car," he says. "Lower-income households don't have the ability to do this because they don't just have $1,500 sitting around."

In an online survey from the Harris Poll on behalf of Rakuten, a cash-back shopping platform, conducted in March, 12% of people making over $100,000 a year said they couldn't afford to pay their bills, while 33% making under $50,000 said the same.

There are risks to having the economy depend on a relatively small number of people to sustain and grow. Namely, if things start to go south for wealthy people — or they start to worry their fortunes are changing — things may go south for everyone. Higher-income people may have more resilience in the face of prospective labor market weakness and inflation than lower-income people, but they're not completely isolated.

Zandi of Moody's says he's not too worried about wealthier people's spending falling off a cliff, though it may fall off somewhat. "Stock prices are down, housing values have gone flat, so their wealths may not increase nearly to the same degree, and that may take some juice out of their spending over time," he says.

There's an adage among economists and investment analysts that the stock market is not the economy, meant to serve as a reminder that little lines going up and down aren't reliable indicators of what's happening in the real economy, in areas such as jobs, wages, and spending. But given the effect richer people have on the economy and the effect the stock market has on their spending, the market is a little bit the economy. So the economy is susceptible to the stock market's swings. If a person making $200,000 sees stocks dive, they may think twice about going to that restaurant down the street for dinner and opt for a meal at home. That hits the restaurant, the waiter, and the rest of the staff, and can eventually ripple across the economy.

"You want to have as many growth engines as possible, and relying on a limited set of economic drivers exposes you to downside risks," EY-Parthenon's Daco says.

Practically no one is feeling hot about the economy right now. Surveys from the University of Michigan found that consumer sentiment had taken a dive across all income groups this year.

"Because of the headwinds we're going through, you're already experiencing a slowdown in spending for a majority of households," Daco says. "And you're risking essentially a further slowdown from a smaller share that drive a bigger share of spending that could be subject to stress from financial market volatility, from lower pressure on stocks, from just the environment of uncertainty that we're seeing."

We're all in this together, rich and poor. It might behoove everyone to root for each other — and perhaps the stock market especially.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.

Business Insider's Discourse stories provide perspectives on the day's most pressing issues, informed by analysis, reporting, and expertise.

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