Inflation is Marginalizing Purchasing Power from the Lower-Income Demo

Mar 7, 2023 | Macro Insights, No Bull Economics

Consumer Spending Post Banner

As households with annual incomes >$70k drive 62% of total food-away-from-home sales, it is more important than ever to focus on this demo especially as spending from the lower-income demo slows.

Commentary

We have recently heard from Wendy’s and Walmart about a 4Q22 spending slow-up from the <$75k income demo which has been offset by a pick-up in higher-income demo spending (likely driven by trade-down as wealthier consumers look for more cost-effective options provided by companies like Wendy’s & Walmart).

Notably, data from 2021 (pre-inflationary spike) presented in the chart below reveals the importance of higher income demos in driving food sales – particularly as it relates to food-away-from-home (eating out).

Food Purches by Income Demographic
Food Purches by Income Demographic

Source: Table 1110. Deciles of income before taxes: Shares of annual aggregate expenditures and sources of income, Consumer Expenditure Surveys, 2021 PDF (bls.gov)

Signup
NoBullEconomics
Restaurant Research

Email Sign-up

15 Second Posts

What is Fixed-Income Issuance Dominated by?

Total U.S. fixed income (FI) issuance declined -34% y/y to $8.8 trillion during 2022 as interest rates ramped up.

Bank Deposits Growing Much Faster than Business Loan Demand

Banks have been parking excess deposits in various forms of government debt that are subject to interest rate risk & in risky crypto bets. This is causing systematic risk.

Nerdwallet Survey Shows an Indebted & Very Stressed Consumer

Consumers are combating the higher price of living & higher interest rates by driving less, buying store brands & taking on more debt.

The United States of America is Worth Saving

Americans need to be reminded about our heritage as the single most productive nation as measured by GDP/person with a unique capability to bless the entire world if we can simply get back to business.

Should Private Banks Go Extinct?

Since the 2008 Great Recession, 134 banks with assets of $1.25 Trillion have been closed by regulators. At the same time, the Fed’s ballooning balance sheet now amounts to nearly 50% of total domestic bank deposits.

What Happened to Silicon Valley Bank?

Don’t assume that SVB’s difficulties are symbolic of the entire banking industry.

What Does the End of the Petrodollar Mean?

The Saudi minister of finance announced that the Kingdom was ending the petrodollar. “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal”. Yikes!

Senator Kennedy Schools Country on Economics 101

We have a choice of how to tame inflation, cut government spending, or throw people out of work.

A Look at Consumer Expenditures by Category

You can learn a lot about someone by how they spend their money…

Forever Wars Are Expensive!

Ukraine aid payments of $77B through 1/15/23 represent the equivalent of a 5% dividend on LTM S&P 500 earnings.

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company