A tale of 2 consumers: High earners doing fine while lower-income households 'under some pressure'

Despite stock market volatility and tariff uncertainty, the US consumer is still spending. But company commentary in recent earnings reports and Wall Street data points are reasons for concern, especially for lower-income households.

"The lower-income consumer is under some pressure," David Tinsley, senior economist at Bank of America Institute, told Yahoo Finance on Monday.

While BofA's latest research shows the share of households carrying a credit card balance has declined year over year, a growing number of lower-income households are becoming more reliant on credit to maintain spending levels.

The firm's research also points to higher-income households' relatively stronger spending growth compared to those with lower incomes. "Higher income" refers to households significantly above the population average, earning over $150,000 per year, while lower income defines the bottom third of households, or those that earn around $60,000 or less.

Another troubling sign: Wage growth among low-income earners in March reached its lowest level since April 2017.

"When you look at wage growth by income, it’s the low-income consumer where wage growth seems to have slowed the most," said Tinsley. "Prices are rising, [but] their wages aren't rising as much. That's causing some pressure."

Commentary on earnings calls also points to a tale of two consumers — one that remains solid and spending, and the other more cautious.

"Last week, it became a bit more clear to us that there are two tales of the consumer going around, and that both may be correct — they are just capturing different perspectives," wrote Lori Calvasina, head of US equity research at RBC Capital Markets, on Monday.

Her team noted that "consumer companies continue to have a more negative tone when talking about the consumer," while financial-related companies and telecom providers have noted a strong customer.

Earlier this month, American Express posted better-than-expected results amid strong spending from its affluent customer base, which was not showing signs of decelerated spending.

The sentiment was echoed by Capital One CEO Richard Fairbank during the credit card company's quarterly call last week.

"The US consumer remains a source of strength in the economy. That's true for almost any metric that we look at," said Fairbank.

Verizon noted similar strength in the consumer.

"When it comes to consumer behavior, in general, we haven't seen any major consumer shifts in behavior ... of course, we have a product of mobility and broadband that's so essential for our consumers," Verizon CEO Hans Vestberg said during the company's earnings call last week.