"US Middle Class Tightens Wallets... Consumer Sentiment Worsens After Low-Income Households"

Middle-Class Sentiment Shifts From 'Stability' to 'Pressure'
Sharp Decline Among Households Earning $50,000 to $100,000
Retailers and Economists Raise Concerns Over Rapid Deterioration
Brands Targeting High-End Products Thrive, While Budget Shoppers Cut Back

The Wall Street Journal (WSJ) reported on August 31 (local time) that following low-income households, consumer sentiment among the American middle class is also deteriorating.

AP Yonhap News

The decline in sentiment among American consumers, including the middle class, has already been observed in key sentiment indicators closely watched by the market. The University of Michigan's Consumer Sentiment Index, which had risen in June and July thanks to progress in trade negotiations and a stock market rally, fell back to 58.2 in August, a 5.7% decrease from the previous month. The Conference Board's Consumer Confidence Index also declined by 1.3 points last month compared to the previous month.

WSJ pointed out that the main reason lies in the weakening economic sentiment of the American middle class, stating, "The mood among the middle class has shifted from 'stability' to 'pressure'." Households with annual incomes below $50,000 have already been feeling increasingly anxious about the economic situation this year, while those earning more than $100,000 per year remain optimistic. However, sentiment among households earning between $50,000 and $100,000 has recently deteriorated rapidly.

According to daily consumer sentiment index data from market research firm Morning Consult, cited by WSJ, households earning more than $100,000 a year and those earning less than $50,000 saw little change in their sentiment index last month. In contrast, the index for households in the $50,000 to $100,000 range fell by nearly 4%. Compared to the peak in June, the decline exceeded 10%. John Leer, an economist at Morning Consult, analyzed, "There was a brief period when middle-class consumers felt everything would go well, but sentiment has since deteriorated sharply."

Retail executives and economic experts are also expressing concern over the recent sharp decline in middle-class sentiment. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, recently stated in a public forum, "Not only low-income households, but even the middle class currently have no disposable income."

Andrew Rees, CEO of the footwear brand Crocs, said during a recent earnings conference call, "Brands focusing on high-end products are performing well," but "consumers of lower-priced products are very sensitive to price increases and are concerned about the economic situation. Some are even staying home entirely." McDonald's also mentioned during its recent earnings call that while the number of low-income customers is declining, visits from middle-class consumers are increasing, and this trend is expected to continue.