Bid farewell to "K-shaped divergence"? PNC report: By 2026, the consumption gap between high-income and low-income households in the United States will largely disappear, with the labor market as the key support.

The PNC Economic Research Department reported that the gap in consumer spending between high-income and low-income groups in the United States had narrowed significantly by 2026. Meanwhile, as the support effect of tax refunds gradually diminishes, the labor market has become a key test for measuring household spending. The "Consumer Health Status Survey" released by PNC in August showed that total credit card spending in July increased by 5.9% year-on-year, slowing from 6.4% in June, but still well above the growth rate of 3.8% at the end of 2025. PNC indicated that the slowdown in July largely reflected the timing of the Amazon Prime Day promotions, which took place earlier in June and drew forward some of the spending. A more noteworthy change occurred beneath the overall data. PNC stated that the "K-shaped" consumption pattern that had persisted for most of the past three years was nearly gone by 2026, with the spending gap between high-income and low-income groups substantially narrowed in July. This marks a significant change compared to earlier this year. PNC noted in its June report that spending among low-income groups had seen notable improvement, with the gap to high-income households shrinking to its lowest level since 2022. Two factors support this convergence: higher tax refunds and improved conditions in the labor market. However, PNC indicated that the labor market has become a more important and sustained driver, while the stimulating effect of tax refunds has largely been exhausted. The waning benefits of tax refunds have made households more susceptible to rising gasoline prices. PNC noted that as fuel prices rose in July, discretionary spending experienced a slight decline, indicating that consumers are now more sensitive to energy costs than earlier this year. Nonetheless, household balance sheets remain relatively healthy. After adjusting for inflation, the median balances in checking and savings accounts across income groups are still 20% to 50% higher than pre-pandemic levels. PNC also found almost no evidence that the proportion of "moonlight families" (those living paycheck to paycheck) is increasing. Even with broader discretionary spending showing signs of weakness, spending on experiential consumption such as concerts, travel, and dining improved in July. PNC suggested that part of this strong momentum could be related to the World Cup finals, although experiential spending has been capturing an increasing share of discretionary consumption for most of the past year. Repayment of student loans remains a potential drag on household spending. Among households needing to make repayments, loan payments average about 8% of post-tax income, with Gen Z families bearing a disproportionately heavy burden. PNC found that for households resuming repayments after the pause ended in 2023, their debit and credit card spending decreased by about half of the increase in their debt repayments, after adjusting for income. For PNC, the sustainability of the narrowing consumption gap between low-income and high-income groups ultimately depends on the labor market. The bank stated that ongoing improvements in employment conditions are crucial for the continuation of spending growth among low-income families.