By Credit and Collections News Staff

Even as many households wrestle with high living costs, thin savings and expensive credit, higher-income Americans are continuing to spend—supporting travel, luxury purchases, services and discretionary retail. That resilience is increasingly tied not simply to paychecks, but to the combination of asset wealth, investment income, financial flexibility and larger monthly budget cushions.

The result is a consumer economy that can look healthier in aggregate than it feels to a large share of households. For creditors, collectors and consumer-finance providers, the divide matters: spending strength at the top may sustain headline retail and services data, while financial stress—and collection risk—remains concentrated farther down the income ladder.

Wealth, not just wages, supports spending

High-income households have advantages that extend beyond a bigger salary. They are more likely to own equities, real estate and other appreciating assets; receive dividends, interest or rental income; and maintain liquidity that can be converted into spending power.

A recent report on high-income spending found that affluent consumers are increasingly moving money from investment accounts into checking accounts to finance purchases. Among the top 10% of earners, the share drawing from investment accounts into checking rose from 6.6% in 2015 to 20.3% in 2026. The top 10% accounted for 45.5% of consumer spending in the first quarter of 2026, according to Moody’s Analytics estimates cited in the report.

That dynamic is significant because it makes household spending less dependent on near-term wage growth. A consumer whose brokerage portfolio, home equity and cash reserves have appreciated can maintain discretionary spending even when sentiment weakens, prices rise or the labor market becomes less certain.

Federal Reserve survey data show the broader pattern: 37% of adults reported receiving interest, dividends or rental income in 2025. Those income sources are especially important for households with financial assets and can provide a buffer when earned income slows or expenses rise.

Bigger budget cushions create flexibility

The other advantage is basic but powerful: higher-income households are more likely to have money left after paying recurring obligations.

In the Federal Reserve’s 2025 household well-being survey, 59% of adults with family income of $100,000 or more said they always or often had money left over at the end of the month. Just 19% of adults with income below $25,000 said the same.

That gap changes how households respond to economic pressure.

For a financially secure consumer, higher prices may mean delaying a purchase, choosing a less expensive option, or drawing on savings without immediately disrupting debt payments. For a consumer with little monthly surplus, the same price increase can force reliance on revolving credit, missed bills, reduced savings or other forms of financial triage.

Overall, 58% of adults said price changes during the prior year had worsened their financial position. The figure was 53% among households earning $100,000 or more, compared with 62% for those earning less than $25,000 and 64% for those earning $25,000 to $49,999.

Higher-income consumers are not immune to inflation. They are simply more likely to have the margin to absorb it.

Spending is concentrated at the top

The concentration of consumption among affluent households means their behavior has an outsized effect on the economy’s headline numbers.

Moody’s Analytics estimates that households in the top 10% by income account for more than 45% of spending, while the bottom 60% account for about 23%. Other measures show a less extreme split, but still confirm that upper-income households control a disproportionate share of total consumption.

For example, the Bureau of Labor Statistics’ Consumer Expenditure Survey found the top 10% of households accounted for 23% of out-of-pocket consumer spending in 2024. The top 30% accounted for more than half, while the bottom half accounted for less than 30%.

This helps explain an apparent contradiction in the economy: retailers, airlines, hotels and premium-service providers can report resilient demand even while many consumers say they are cutting back.

The Federal Reserve’s January 2026 Beige Book similarly reported that consumer spending rose slightly overall, with strength in high-end goods and services. Several Federal Reserve Districts said higher-income consumers were increasing spending on luxury goods, travel, tourism and experiences, while lower- and moderate-income households were becoming more price-sensitive and hesitant to purchase nonessentials.

The “K-shaped” consumer story has limits

The phrase “K-shaped economy” has become shorthand for higher-income households moving ahead while lower-income households fall behind. It captures a real divergence in financial flexibility, but the data do not support every version of the story equally well.

The Federal Reserve Bank of Minneapolis cautioned in March that available spending measures vary widely. Moody’s analysis suggests a sharp divergence in consumer spending by income, while Bank of America’s card data show a more recent separation in spending growth. The New York Fed’s retail-spending measures, however, found less pronounced differences, and government consumer-expenditure data did not show a clear, consistent K-shaped pattern through 2024.

The methodological point matters. Some estimates define spending broadly and infer it from income, savings and wealth data; card-based data capture actual transactions but may omit large purchases, cash payments and households without a particular bank’s cards; government surveys are more comprehensive but lagged.

Still, the underlying credit implication is more straightforward than the measurement debate: wealth and liquidity can enable affluent households to keep consuming through uncertainty, while consumers with modest income and limited financial reserves are much more exposed to price shocks, income volatility and debt-service pressure.

What it means for creditors and collectors

For the credit and collections industry, aggregate consumer-spending strength should not be mistaken for broad-based household financial health.

Several implications stand out:

• Portfolio performance may diverge sharply by borrower segment. Higher-income borrowers may preserve spending and payment performance because they can draw on savings, investments or home equity. Lower-income borrowers may experience greater stress from ordinary budget disruptions.

• Income alone may not fully measure repayment capacity at the top. Asset ownership, investment income, savings balances and liquidity can shape a consumer’s ability to continue paying—even when labor income is uneven.

• Payment distress can coexist with solid consumer-spending data. Retail sales, travel demand and premium discretionary purchases may be supported by a relatively narrow slice of affluent households. Those indicators should not be read as proof that financially vulnerable borrowers are improving.

• Collections strategies need stronger segmentation. A borrower facing temporary cash-flow disruption may respond differently from one whose finances have become structurally impaired by rent, food, insurance, medical costs or revolving debt. More targeted outreach, realistic settlement options and flexible payment arrangements are likely to be more effective than a one-size-fits-all approach.

• Creditors should watch for early signs of stress below the affluent tier. In the Fed survey, 77% of adults reported taking at least one action in response to higher prices, including switching to cheaper products, using less of certain products, delaying major purchases or reducing savings. Those adjustments can precede greater reliance on consumer credit or difficulty meeting obligations.

A resilient consumer—unevenly distributed

High-income Americans are keeping the spending engine running because many have multiple layers of protection: higher earnings, larger savings cushions, investment gains, non-labor income and assets that can be sold or borrowed against. That spending can make the broader economy appear more durable than consumer sentiment alone would suggest.

But it is also concentrated. The households most able to continue booking trips, buying premium products and paying for services are not representative of the consumers most likely to face delinquency, hardship or collection activity.

For credit and collection professionals, the takeaway is clear: consumer resilience remains real, but it is not evenly shared. The most useful question is no longer whether “the consumer” is holding up. It is which consumer—and how long their financial buffer can last.