The U.S. Economy: What the Numbers Say vs. How Consumers Feel

The U.S. Economy: What the Numbers Say vs. How Consumers Feel

Cara Murphy|02 October 2026

The economy at a glance

  • Headline growth was revised up: Q2 2026 GDP to 2.2% (from 1.5%) and Q1 to 2.5% (from 2.1%).
  • The K is widening: the top 20% of households now make up 60% of consumer spending, and their outlays grew 6.5% against 3.5% inflation. Spending by the bottom 80% grew just 2.6%.
  • Households are saving less: the personal savings rate fell to 4.1% in August 2026 from 7.4% in January 2024, as August spending (+$190.8B) far outpaced income (+$66.6B).
  • Card debt is near its record: $1.26 trillion in Q2 2026, just shy of the $1.28 trillion peak, with an average APR of 23.8%.
  • Sentiment is near record lows: 48.1 in September, behind only May 2026’s 44.8.
Q2 2026 GDP (third estimate)2.2%from 1.5%
Energy prices, Aug 2026+16.0%year over year
Personal savings rate4.1%Aug 2026
Credit card debt$1.26TQ2 2026
Consumer sentiment48.1Sep 2026

With just one month to go until the highly contentious mid-term elections, now is a good time to pause and look at the US economy. This week, the US Commerce Department released its third estimate of Q2 2026 GDP, revising figures from 1.5% to 2.2%, and it also raised Q1 2026 GDP from 2.1% to 2.5%, along with further updates to GDP figures through 2021. Overall, the positive numbers continue to support the narrative of a resilient and growing economy. However, the underlying figures do not paint as rosy a picture. The K-shaped economy not only persists but is diverging further, leaving behind a positive headline number while failing to address major headwinds many Americans face.

The K-shaped economy first hit headlines in the fall of 2025, when Moody’s Analytics published a report showing the top 10% of income earners accounted for nearly 50% of total US consumer spending. The Federal Reserve Bank of Dallas then confirmed Moody’s analysis, noting those who make over $175,000 annually, in the top 20% of income earners, accounted for 57% of total US consumer spending in 2025. Both sources noted the figures help explain how the economy has consistently grown despite an increase in layoffs in early 2025, sticky inflation, rising debt totals, and higher delinquency rates. Mark Zandi, Moody’s chief economist, wrote, “The economy’s prospects are tethered to the fortunes and spending of the well-to-do”, while the Federal Reserve Bank of Dallas wrote, “The rise in consumption concentration can be explained by rising income concentration and wealth concentration.” The findings highlight the K-shaped economy: a small but incredibly affluent portion of the US population continues to spend indiscriminately, while most Americans struggle to keep up with the rising cost of living.

In 2026, this trend has only intensified. According to Moody’s updated estimates, the top 20% of households now represent 60% of consumer spending. In an interview with Yahoo! Finance, Zandi noted that the top 20% of income earners saw a 6.5% increase in personal spending outlays from June 2025 to June 2026, well above the 3.5% inflation rate. Meanwhile, spending by the bottom 80% of consumers grew 2.6% year over year, less than the increase in consumer prices. Consumer spending accounts for 70% of GDP growth, making it a significant share. The Commerce Department noted that consumer spending grew 3.8% in Q2 2026, but the analysis above shows this growth was uneven and driven mainly by a small group of affluent Americans who continue to spend.

As for the remaining 80% of income earners, the macroeconomic environment is not in their favor. High energy costs, which were up 16.0% YoY in August 2026, are once again driving total inflation higher. Headline inflation surpassed wage growth in April 2026 for the first time since 2022, only four years ago, and has trended above wage gains ever since. Americans also face a renewed squeeze on their paychecks, reflected in reduced personal savings. In July 2022, under pressure from intense inflation, the personal savings rate hit 2.4%, the lowest level since the 2008-09 recession. By January 2024, the personal savings rate climbed back to 7.4%, but has been declining ever since, dropping to 4.1% in August 2026. Americans are spending more and saving less.

The data shows that Americans are not only saving less but also spending more than their incomes. In August 2026, personal expenditures increased by $190.8 billion (+0.9% from the prior month), while personal income only increased by $66.6 billion (+0.2%). There is only one way to spend more than you make: taking on debt.

The New York Federal Reserve’s Q2 2026 quarterly report on US household debt and credit shows Americans’ credit card debt rose to $1.26 trillion, an increase of $21 billion in Q2 2026 from the prior quarter and is just shy of the all-time record high of $1.28 trillion set in Q4 2025. While data for Q3 2026 is not yet available, it is likely to show a further increase in credit card balances as consumers navigate another uptick in inflation. The good news is that in Q2 2026, serious credit card delinquency fell from 13.1% to 12.9%—though it remains the highest level since the 2008-09 recession. The bad news is that more Americans are becoming delinquent on their credit card balances than the prior quarter, up to 8.69% in Q2 from 8.61% in Q1 2026. Even worse, unpaid balances faced an average APR of 23.8% in August 2026, near record highs, according to Lending Tree. And the final cherry on top is the Federal Reserve marked its first interest rate hike in three years in September with expectations of further rate increases to come to tackle inflation, meaning credit card interest rates are likely only to rise in the coming months. All this is to say, Americans are saving less, spending more, and turning to expensive debt to do so.

In many ways, it feels like this story has remained the same for the past two years—and in many ways, it has. Wealthy Americans keep spending, driving much of the GDP growth, while smaller portions of the metric, including government spending and exports, have increased as well. The headline figures paint a chipper, resilient economy, but that does not align with American sentiment, which fell to 48.1 in September, the second-lowest on record behind the May 2026 low of 44.8, according to the University of Michigan.

The University of Michigan specifies there has been a broad agreement across the political spectrum that the economy has weakened since the beginning of 2026, with only a month to go until the mid-term elections. Regardless of how the election results materialize, it will likely be some time before global energy prices abate and the Fed returns to slashing interest rates. A rocky road lies ahead for 2027, no matter how the pie is sliced. Headline economic figures may continue to print positive; however, headwinds may persist for those 80% of income earners in the bottom leg of the K-shaped economy.

Explore the data

The figures behind the article. Choose a topic.

Sources: US Commerce Department (GDP, Q2 2026 third estimate); Moody’s Analytics and Federal Reserve Bank of Dallas (spending shares); Mark Zandi via Yahoo! Finance (spending growth); BLS (energy prices); BEA (savings, income and outlays); New York Fed Quarterly Report on Household Debt and Credit, Q2 2026; LendingTree (APR); University of Michigan Surveys of Consumers. Links to each source are in the article above.

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