Call it the two-speed economy. Rich Americans are spending at healthy rates, driving overall demand — but there are early signs that low- and middle-income consumers are starting to cut back.

Why it matters: The split-spending pattern is a change from recent years, when pandemic-era benefits, a savings stockpile and rapid wage growth helped support spending across all income groups.

• Now economists and CEOs of consumer-facing companies warn that the oft-predicted spending slowdown has arrived — but it's highly concentrated among one segment of the population.

The big picture: A steady jobs market, cooling inflation and real wage gains suggest a favorable environment to keep spending.

• But Bank of America Institute recently analyzed card spending and found that after "being a point of strength during 2023, it appears that lower- and middle-income households' spending growth has been softening," though it remains in positive territory year over year.
• Once rip-roaring wage growth among low-income consumers has also slowed. In 2022 and early 2023, low-income workers were notching pay increases around 2 percentage points higher than upper-income earners, according to the Atlanta Fed's wage tracker.
• Not anymore: Lowest quartile earners, for example, saw a 5.5% gain in average pay over the last year as of February, similar to that of high earners and down from a 7.5% rate of wage growth in November 2022.

Meanwhile, as recently as this past June, University of Michigan survey data showed similar levels of consumer sentiment between bottom-third earners and top-level earners. But the gap between them has widened sharply since then, with top earners much more positive about conditions in recent months.

• And delinquencies on credit card debts and auto loans have ticked up in recent months to the highest levels in more than a decade.

State of play: "Signs of households under stress are spreading, but not all households appear to be under pressure," UBS economist Jonathan Pingle wrote in a note last week. Higher-income Americans have seen their wealth increase and have abundant liquid assets, he wrote.

• Less clear is whether lower-income stress is enough to knock the strikingly resilient U.S. expansion off course.
• "Even if the upper-income households are driving the expansion, the narrowness of it means it is a riskier, more fragile expansion," Pingle tells Axios.

What CEOs are saying

Evidence of this divide in spending was apparent in recent earnings calls, with leaders of major consumer brands noting weakness among only some of their customers.

• "What has been important is to understand there's a section of the population that has come under pressure from disposable income," Coca-Cola CEO James Quincey said on the company's earnings call last month.
• "On the other hand, there's a segment of consumers that still has plenty of money, plenty of purchasing power and we've seen strong growth for some of the higher price point" products, Quincey added.

Fast-food giant McDonald's noted a similar phenomenon.

• "[W]here you see the pressure with the U.S. consumer is that low-income consumer, so call it $45,000 and under. That consumer is pressured," CEO Christopher Kempczinski told investors last month.
• "If you think about middle income, high income, we're not seeing any real change in behavior with those," Kempczinski said. "But the battleground is certainly with that low-income consumer."

Meanwhile, Darden Restaurants — parent company of chains like Olive Garden and LongHorn Steakhouse — reported last week that households with incomes above $150,000 had more transactions at its restaurants in the most recent quarter than a year ago; transactions among those making less than $50,000 fell across all of its brands.