K-Shaped Christmas Highlights Growing Economic Divide in the US
The 2025 Christmas season in the United States has been described as K-shaped, reflecting a sharp economic divide. A wealthy minority is driving luxury spending and benefiting from rising stock-market gains, while many Americans face rising costs and stagnant wages.
The luxury retail scene in New York City exemplifies this contrast. Printemps, a French department store, opened its first New York outlet in 2025, featuring high-end attractions like a skating rink, bar, champagne cart, and luxury items including a $600 fur coat and $1,450 leather boots. Just across the street near Trinity Church, long lines for free food and necessities highlight the stark disparity between affluent shoppers and those struggling with poverty.
Stock-market gains have predominantly benefited the wealthy: over the past five years, the S&P 500 has risen approximately 86%. However, stock ownership is heavily concentrated, with the top 1% owning nearly 50% of stocks, the top 10% owning 87.2%, and the bottom 50% owning a mere 1.1%.
Economic challenges persist with inflation rising from 2.3% in April to 3% in September and unemployment reaching 4.4% the same month. Research from Yale Budget Lab estimates that Trump administration tariffs could add 1.2% to consumer prices, increasing costs for the average household by about $1,700 annually. Additionally, anti-poverty programs were cut under the Trump administration, tightening eligibility for food stamps and reducing housing assistance. The Robin Hood Foundation reports that New York City's poverty rate reached 25% this year, significantly higher than the national rate of approximately 13%.
Consumer spending growth further illustrates the divide. Over the past year, spending among low-income households increased by only 0.7%, while spending by high-income households rose 2.7%. Interestingly, spending increased across opposite parts of the credit-score spectrum, both super-prime and sub-prime borrowers.
Corporate executives confirm these trends. Delta's CEO Ed Bastian notes growth in premium travel demand, Coca-Cola's Henrique Braun credits premium products for revenue growth, and McDonald's chief Chris Kempczinski observes that middle- and low-income consumers are under pressure and may skip meals.
Public opinion on economic issues shows a political dimension. A YouGov/Economist poll found former President Trump's inflation-issue approval rating dropping from +5% after his inauguration to -35% by November. Axios reports that the administration has embarked on a nationwide tour to address pocketbook worries amid this environment.
