Higher oil prices due to the U.S.-Iran war are straining an already strapped lower-income consumer . But as equities fall, there’s a warning sign that higher earners are also starting to feel the heat. Internal data from Bank of America on credit and debit card spending revealed that from the start of the war through March 21, lower-income households’ annual spending growth rate excluding gasoline slowed as higher energy prices took their toll. Meanwhile, higher-income households’ rate was largely stable. That data reveals that the war in the Middle East is only solidifying the K-shaped economy , where higher earners spend at elevated levels — keeping headline economic figures healthy with it — while lower earners struggle to stay afloat. Although wealthier people are still spending, their stance on the economy is weakening. 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 cohort. The survey’s director, Joanne Hsu, in a press release said that consumers with stock wealth were “buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict,” leading to bigger sentiment declines in these groups. A surging stock market has helped create a ” wealth effect ” for high-income households, where t …
