NY Fed Chief Sees Growing Divide Between Low-Income and High-Income Households

A top Federal Reserve official said he sees an increasing divide between low-income and high-income households.

John C. Williams, president and CEO of the Federal Reserve Bank of New York, signaled a cautious but optimistic outlook for the United States economy Tuesday (March 3) in a speech at the America’s Credit Unions Governmental Affairs Conference 2026 in Washington, D.C.

Still, his speech was titled “Two Sides of a Coin” and focused in part on a gulf between wealthy and poor consumers against the backdrop of tariffs and ongoing inflation.

Williams pointed to robust spending by high-income households as a primary driver of recent GDP growth, fueled by a soaring stock market, rising home prices and a 2020-21 mortgage refinancing boom.

“Meanwhile, lower-income households have shown signs of becoming more financially constrained,” he said. “A recent New York Fed analysis showed that mortgage delinquency rates were higher and most pronounced among borrowers who live in lower-income zip codes and counties with rising unemployment rates.”

In discussing tariffs, Williams said he estimates that the increase in tariffs has driven around “one-half to three-quarters of a percentage point to the current inflation rate of about 3%.”

These costs “have overwhelmingly been borne domestically” by U.S. businesses and consumers.

That pain could be seen in the PYMNTS Intelligence report “Tariffs Turn Up the Heat as Product Leaders Confront Peak Uncertainty,” which found that 47% of product leaders at goods firms said tariffs are mostly or completely negative for business finances.

In addition, 59% of goods firm product leaders said tariff disruption has kept their companies from pursuing long-term initiatives toward cost-saving operational adjustments, while 60% said tariff-driven uncertainty has hindered their business’s ability to fund AI and automation.

In the meantime, the Fed’s goal of reducing inflation has been stalled somewhat due to the effects of tariffs, Williams said.

“Despite this lack of headway, we are seeing some encouraging trends,” he said, adding these are his views and not those of the Federal Reserve or the Federal Open Market Committee (FOMC).

“First, there are no signs of significant second-round effects from tariffs,” he said. “No global supply-chain bottlenecks have emerged. And wage growth has remained stable at levels consistent with price stability. Second, underlying inflation excluding imported goods has been moving in the right direction.”

In addition, “most survey- and market-based measures of inflation expectations,” including ones from the New York Fed’s Survey of Consumer Expectations, are at levels consistent with the 2% goal set by the FOMC.