Soaring oil prices due to the Iran war are putting a strain on already struggling low-income consumers. But as stocks fall, there are warning signs that even high-income earners are starting to feel the heat. Bank of America’s internal data on credit and debit card spending shows that from the start of the war through March 21, annual spending growth among low-income households, excluding gasoline, slowed as a result of soaring energy prices. On the other hand, the proportion of high-income households remained almost stable. The data makes clear that the wars in the Middle East are only cementing the K-shaped economy. There, high-income earners spend at high levels and maintain the health of key economic indicators, while lower-income earners struggle to make ends meet. Although the wealthy continue to spend, their attitudes toward the economy have weakened. According to a monthly survey conducted by the University of Michigan, consumer sentiment fell more than 3 points in March to 53.3. This decline was more pronounced among high-income groups. Research director Joan Hsu said in a press release that consumers with equity assets have been “suffered by both high gas prices and volatile financial markets following the Iran conflict,” leading to a significant decline in sentiment among these groups. The soaring stock market has helped create a “wealth effect” for high-income households, who feel more comfortable spending as their wealth grows, even if their incomes haven’t necessarily increased. The biggest risk to the economy is a stock market correction, Goldman Sachs said in a February note, as high-income consumers have disproportionately supported U.S. consumer spending in recent years. Goldman US economist Pierfrancesco May theorized that a market downturn could lead to high-income groups leaving, while lower-income households could still suffer, estimating that a 10% drop in stock prices could reduce GDP by 0.5 percentage points in 2026, and a 20% decline could lead to a full percentage point decline. Three of the four major U.S. indexes slipped into correction territory on Friday, with the S&P 500 an outlier. As of Monday’s close, the index was 0.6 percentage points away from a 10% deviation from its 52-week high, but Tuesday’s rally pushed the index further away from that level. .SPX .DJI, .IXIC Mountain 2026-01-28 Chart of .SPX vs. .DJI vs. .IXIC since January 28, 2026. Pooja Sriram, U.S. economist at Barclays, said sentiment statistics make it clear that higher-income earners are concerned about the economic outlook but are not yet suffering as much as lower-income earners. “I think people are really on the sidelines right now,” she says. “It’s understandable that it shows in the sentiment…but it’s not reflected in the data right now. And given the state of the balance sheets, the wealth that people have accumulated over the past few years, even a 7% to 10% correction doesn’t make them poorer by any means.” That wait-and-see behavior also extends to investing, according to a Monday memo from Goldman’s John Flood. He said long-only trading activity has been virtually non-existent since the start of the Middle East wars, leaving investors on the sidelines. The uncertainty that remains in all projections is the difficulty in predicting the duration of the Iran war. If the conflict drags on, those with higher incomes will feel the pain. “This inequality is now getting worse,” Barclays’ Sriram said of the war. “Low-income consumers are clearly starting to come under pressure, and the longer this situation drags on, the more we start to worry about the overall risks to consumer spending.” — CNBC’s Fred Imbert contributed to the report Correction: This article has been corrected to reflect that Goldman’s Pierfrancesco May estimated that a 10% decline in stock prices could reduce GDP by half a percentage point in 2026. A previous version incorrectly stated the magnitude of the potential GDP decline.
