The richest 10% of American consumers account for the majority of discretionary spending — money spent on non-essentials like dining, travel, and entertainment — according to a July 6, 2026, analysis from the Bank of America Institute. The insight comes from Bank of America's internal transaction and account data, which lets the bank track how millions of consumers are actually spending money in near real time, rather than waiting for official government reports that arrive weeks or months late.

Why This Matters for the Economy

On the surface, this finding might seem like just another data point. But for anyone trying to understand how strong consumer demand really is, it reshapes the picture. When you look at headline retail-sales numbers or credit-card spending reports, they blend all income levels together. If the richest 10% are doing most of the discretionary spending, then strong overall spending numbers could be hiding a shakier foundation — one that rests on a narrow slice of the population rather than spread broadly across income groups.

A consumption pattern concentrated at the top behaves differently when times get tough. The wealthy are more sensitive to swings in stock-market and home prices, because a larger share of their wealth sits in assets rather than wages. Middle and lower-income households, by contrast, depend more on their paycheck and whether they can find steady work. A recession that tanks stock prices hits the rich harder through their portfolios; one that kills jobs hits everyone else harder through their income.

How We Got Here

The roots of this top-heavy spending pattern run back to the pandemic and what came after. Lower- and middle-income households have been squeezed for years. Inflation — the broad rise in prices across the economy — has eaten into their wages, and the extra savings they accumulated during lockdowns in 2020-2021 have largely dried up. Meanwhile, wealthier households have benefited from soaring stock markets. Those who own homes with locked-in mortgage rates from years past also face far lower borrowing costs than renters or first-time buyers, who are stuck taking on new mortgages at today's higher rates. The combination leaves the wealthy with more cushion to spend on extras; everyone else is focused on covering the bills.

What This Means for Investors and Markets

The broader context here is that different types of companies face different kinds of risk depending on where their customers come from. A luxury hotel chain or high-end apparel retailer depends on wealthy customers with strong discretionary spending; they're more exposed to stock-market crashes and asset-price declines. A discount grocer or basic-goods manufacturer sells to a wider income spread, so their demand stays steadier when the economy stumbles. If Bank of America's own data confirms that discretionary spending is concentrated at the top, that's a useful check on management claims that consumer demand is "resilient" — which often bundle together both rich and poor without saying who's actually buying.

There's a narrower policy angle worth keeping in mind. A spending base concentrated among high earners responds more to stock prices and investment gains than to job creation or unemployment rates. This matters for how central-bank decisions trickle through to actual spending. When the Federal Reserve cuts interest rates, those cuts can lift stock valuations, which helps wealthy savers and investors directly. Rate cuts also make borrowing cheaper in theory, but if most discretionary spending is already coming from people who aren't price-sensitive on credit, the boost to spending from lower rates may be smaller than policymakers hope.

Reading the Data Correctly

This analysis is a snapshot of spending patterns as of early July 2026, not a prediction of what comes next. The composition of discretionary spending can shift week to week as markets move, earnings seasons arrive, or labor conditions change for lower-income workers. Bank of America publishes these insights frequently precisely because the picture changes. Smart market participants treat it as one piece of a larger puzzle — alongside Census retail-sales reports, real-time card-spending data from other banks, and official government consumption figures — rather than as the final word on how the economy is performing.