MNI BRIEF: NY Fed Data Show K-Shaped Spending Pattern

College graduates and higher income households continue to outspend their poorer counterparts in evidence of a bifurcated economy that raised concerns about the fragility of the expansion, New York Fed data published Tuesday showed. 

“Despite the relatively more difficult labor market faced by college graduates in 2025, they are continuing to consume more than nongraduates do at the same or higher rate than they did in the previous few years, The difference in the trend in retail spending between college graduates and nongraduates is consistent with the story of a “K-shaped economy,” New York Fed economic research advisor Rajashri Chakrabarti and co-authors wrote in a new blog highlighting additions to the bank’s Economic Heterogeneity Indicators. 

Retail spending for households with no college graduate respondent was lower in 2023 and most of 2024 than in January 2023, the report said, and now stands just 4% above the January 2023 level. In contrast, college graduates’ retail spending stagnated in 2023-24 but had risen 6% by December 2025 relative to January 2023.

The report also found that in the New York Fed’s district, lower income households have also experienced higher inflation than higher income ones.