The top 10% of households drive nearly 23% of US spending

The US economy looks healthy on the surface. But one number tells a different story. The top 10% of US households account for nearly 23% of consumer spending. The bottom 10% contribute just 4%. That gap, according to BofA Securities, is why overall spending looks strong even as many Americans feel financially squeezed.

This is the K-shaped economy. Higher-income households move up one arm of the K. Lower-income households slide down the other.

We think the NY Fed's data makes this split unusually concrete — and worth understanding in detail.

Who is actually driving retail spending?

Researchers at the Federal Reserve Bank of New York tracked retail spending using a panel of 200,000 respondents from the analytics firm Numerator. They split consumers into three groups:

• Low income: under $40,000 per year
• Middle income: $40,000–$125,000 per year
• High income: over $125,000 per year