Consumers are experiencing different realities depending on income level, suggesting the possibility of a "K"-shaped economic recovery coming out of the pandemic.
"Our consumers are doing really well," American Express CFO Christophe Le Caillec told CNBC last month, citing spending on flights and dinning out. "They're enjoying life for sure." People taking these loans are more likely to be lower-income with no more than a high school diploma, Lanier said. Some may be turning to these small loans after being rejected for larger sums by other lenders, but Upstart has also made changes to its automatic approval processes, the company said.
At the same time, costs for a variety of goods and services have risen. Though the pace of inflation has cooled from multidecade highs seen in recent years, prices continue to increase at ahas seen consumers shifting more to eating at home than the quick-service restaurants it supplies. Management said the lower tax brackets in particular have switched to private labels from Tyson's name brand when grocery shopping.
Schipper said evidence of price matching or trading down can be good news for the Federal Reserve, which is looking for signs that previously interest rate hikes have had their intended effects of tightening the economy.Higher earners, though a smaller segment of the population, remain on a tear, and it could make all the difference for some companies.