High oil prices due to the US-Iran war are straining already strapped low-income consumers. But as rates fall, there is a sign that high earners are also starting to feel the heat. Internal data from Bank of America on credit and debit card usage revealed that from the start of the war through March 21, the annual growth rate of low-income households excluding gasoline slowed as high energy prices worsened. Meanwhile, the proportion of households with high incomes was very stable. That data reveals that the conflict in the Middle East reinforces a K-shaped economy, where high-income earners end up at the top – keeping the economy’s heads healthy as well – while the low-income struggle to stay afloat. Although rich people are still spending money, their economic situation is weak. Consumer sentiment fell more than three points to 53.3 in March, according to the University of Michigan’s monthly survey. The decline was more pronounced in the higher income group. The director of the study, Joanne Hsu, in a press release said that the buyers with wealth of the stock are “lightened by the increasing prices of gas and unstable financial markets after the conflicts in Iran,” which leads to a decrease in sentiment in these groups. The booming stock market has helped create a “wealth effect” for high-income families, where they feel comfortable spending money as their assets grow, even if their income does not increase. As wealthy consumers have disproportionately boosted US consumer spending in recent years, the biggest risk to the economy has been a stock market correction, Goldman Sachs said in a February report. With the view that a weak market could lead to high income earners pulling back – all while low-income families are struggling – US Goldman economist Pierfrancesco Mei estimated that a 10% drop could lead to a 0.5% knock on GDP by 2026. A 20% drop could lead to a full percentage drop. On Friday, three of the four major US indexes slipped into correction territory, the S & P 500 being the outlier. By Monday’s close, the index was 0.6 percent off 10% from its 52-week high, although stocks on Tuesday were rising and moving away from that level. .SPX .DJI,.IXIC happy 2026-01-28 .SPX vs. .DJI vs. .IXIC from Jan. 28, 2026 chart. Pooja Sriram, US economist at Barclays, said the sentiment figures revealed that high-income earners are worried about the economic outlook, but are not suffering as much as low-income households. “I think people are misguided now,” he said. And given the level of balance, the wealth that people have accumulated over the last few years, even a 7% to 10% correction doesn’t really make them poorer in any way.” The Middle East is almost non-existent. The uncertainty over the duration of the war in Iran is likely to make people suffer more. consumer money.” – CNBC’s Fred Imbert contributed to the report
#lowincome #consumers #struggle #rising #gas #prices #highincome #earners #panic #markets #drop