Retail sales exceeded expectations in 2025, remaining a bright spot in the broader economy. However, a closer look at consumer behavior shows that spending strength is not evenly distributed across income groups.
Recent analysis of credit and debit card data, conducted with industry partners, examined retail spending by income decile. The findings suggest a pattern often described as a K-shaped economy, where different income groups experience sharply different growth trajectories. While total discretionary retail spending increased year over year, that growth was largely driven by higher-income consumers.
Lower- and middle-income households saw slower or negative growth in discretionary spending during 2025. In contrast, the top income segments increased their spending at a much stronger pace. Notably, the top 20 percent of spenders accounted for more than 60 percent of total discretionary spending, effectively offsetting weakness among the remaining income groups, and keeping overall retail growth positive.
This pattern was visible across many retail sectors, although it did not appear uniformly. Some sectors experienced growth across most income levels, while others saw broad-based declines. Rather than a simple split between high-and low-income households, the data shows a more layered and nuanced stratification in consumer behavior.
What remains clear is that spending momentum among lower to middle-income consumers has begun to slow, even as top-line retail sales remain resilient. Higher-income households continue to play an outsized role in supporting retail performance.
Looking ahead to 2026, overall retail sales are expected to continue growing. However, that growth is unlikely to be evenly shared across all consumer segments. For retailers and policymakers alike, understanding these differences will be increasingly important as strategies adapt to a more uneven consumer landscape.
