Trump tariffs and high interest rates widen U.S. consumption gap
Low-income Americans struggle to afford even McDonald’s, while high-income consumers increase premium spending
Amid inflation that has persisted globally since the COVID-19 pandemic, a recent surge in tariffs and high interest rates is exacerbating consumption inequality in the United States.
On November 16 (local time), the Los Angeles Times analyzed sales data from McDonald’s, Delta Airlines, hotel chains, and household delinquency rates to highlight recent shifts in consumer behavior.
McDonald’s second-quarter revenue rose 5% year-on-year to $6.84 billion. However, visits by its core low-income customers declined in double digits, while visits from high-income consumers increased, and middle-income visits showed only modest growth.
Experts attribute this widening consumption gap largely to sharp price increases at McDonald’s. From 2019 to 2024, menu prices rose an average of 40%, with the Big Mac rising from $4.39 to $5.29 and a 10-piece McNuggets set increasing from $7.19 to $9.19.
Liquidity measures during the pandemic, tariffs under the Trump administration, and the post-pandemic surge in U.S. benchmark interest rates have further squeezed the purchasing power of low-income households.
According to credit scoring company VantageScore, the delinquency rate for households earning less than $45,000 annually that were over 60 days past due spiked after the pandemic and has not significantly improved since 2022. Harvard University’s Joint Center for Housing Studies reports that as of 2023, about 22.6 million renters spend more than 30% of their income on housing, up 3.2 percentage points from 2019. The median disposable income for low-income renters, after housing costs, stands at $250 per month, a 55% decline from 2001.
In contrast, high-income households continue to spend relatively steadily thanks to more stable incomes. Delta Airlines’ second-quarter report shows a 5% drop in economy class revenue, while premium seat revenue rose by 5%. Costa surveys indicate that luxury hotels such as Four Seasons and Ritz-Carlton saw a 2.9% increase in revenue this year, whereas budget hotels experienced a 3.1% decline.
“Low-income households are finding it increasingly difficult to make ends meet each month,” said Ricardo Vandevo, an economist at VantageScore, in an interview with the Los Angeles Times.