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Consumer spending powers the US economy. A K-shaped economy will further test this dynamic in 2026. [Yahoo! Finance]
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This year, the division between the economic haves and have nots widened, with sentiment souring as those in the middle of the income distribution were pressured by a softening labor market and feared inflation resulting from tariffs. As of November, the unemployment rate stood at a four-year high of 4.6% . The University of Michigan's final consumer sentiment reading of the year found that nearly two-thirds of respondents expect unemployment to rise in the year ahead. "Despite some signs of improvement to close out the year, sentiment remains nearly 30% below December 2024, as pocketbook issues continue to dominate consumer views of the economy," said Joanne Hsu, director for the University of Michigan survey of consumers. A report from the Bank of America Institute published on Dec. 22 showed spending from consumers in the top third of the income distribution rose 4% over the prior year in November, the fastest level of growth in four years. Spending from households in the lo
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