Earnings Reports Show a Split Economy as Lower-Income Wallets Tighten

On the surface, consumer spending has proved durable as headline retail sales and credit data remain solid. Yet beneath those numbers, a different current is building, one showing that lower-income consumers are shifting where they’re spending their wages.

Chipotle Flags Pressure on Value-Conscious Diners

Nowhere was that divide clearer than in Chipotle’s most recent quarter, where management pointed to slowing traffic among lower-income diners. Chief Executive Brian Niccol said that while higher-income guests continued to visit, “our lower-income consumer has started to pull back a bit.” Comparable sales growth came largely from pricing and menu mix rather than transaction gains, suggesting that frequency is softening at the value end of the customer base.

Chipotle’s comments echoed what other quick-service and casual dining brands have reported through the third quarter, that while demand remains healthy overall, the customer earning under roughly $50,000 a year is being more selective. Niccol said that the pattern shows up in weekday traffic and in smaller average checks from guests “who are watching budgets more closely.”

Those remarks align with PYMNTS Intelligence data showing that these lower-income households, which make up the core of the Labor Economy, face persistent financial fragility. According to the Wage to Wallet Index for October 2025, roughly 60 million U.S. workers earning $25 an hour or less, generally under $50,000 a year, account for 36.5% of all employment but only 15.1% of total consumer spending, or about $1.7 trillion annually.

Amazon’s Grocery Surge

At the other end of the spectrum, Amazon reported third-quarter results that show consumers are still spending, in part with a notable shift to getting their groceries online, and at relatively lower price points. As PYMNTS reported, the company said online grocery sales rose strongly as more shoppers use digital channels for routine purchases. Chief Financial Officer Brian Olsavsky noted that “customers are finding more value in recurring essentials like groceries and household items.”

In PYMNTS’ coverage of Amazon’s earnings, executives emphasized how the shift to grocery is part of a broader pattern. The change benefits Amazon’s fulfillment and subscription ecosystem but also reflects what PYMNTS data indicates is a tighter demand elasticity, where consumers trade down, seek sales and cut discretionary items first when budgets tighten.

Inside the Wage to Wallet Data

The Wage to Wallet Index provides quantitative context for these corporate signals. It finds that Labor Economy households have $5,737 in liquid savings on average compared to $9,869 for the typical U.S. consumer, and fewer than 1 in 3 could cover a $2,000 emergency within 30 days. Their consumer sentiment score stands at 49.2, well below the general population’s 54.7, reflecting persistent stress around income continuity and job stability.

When prices rise, these households adjust quickly. Nearly 60% report buying lower-priced goods, and 54% say they wait for sales before making purchases. About 60% have reduced spending on non-essentials, a pattern that mirrors Chipotle’s traffic trends and the grocery channel migration Amazon is seeing.

Even small disruptions in hours worked or delays in paychecks create immediate ripple effects. PYMNTS data shows that income continuity is critical: when pay is smooth and on time, spending remains steady; when it is not, consumption stalls. Wage softening or reduced hours can cut $30 billion to $40 billion in annualized consumer outlays across this cohort.

Earnings season’s early readouts suggest that resilience at the top of the income scale is masking fragility at the bottom. Higher-income households continue to support travel, dining and discretionary retail, while lower-income households are focusing on groceries, necessities and debt management.