A Divided Economy is Reshaping Consumer Spending

Highlights:

• A widening economic divide between households with strong and weak financial capacity is shrinking the middle class and affecting spending behaviors, making traditional, broad segmentation strategies less effective. 

• Marketers who leverage real-world spending behavior data—not outdated, modeled data—can pinpoint high-value audiences with far greater precision, enabling more targeted and cost-effective marketing strategies and stronger customer engagement in a rapidly evolving economy.  

The consumer economic divide is changing—and it’s reshaping how and where people spend. 

For marketers and digital agencies that are facing tighter budgets and rising pressure to perform, shifts in spending are more than trends. They’re actionable insights that can power smarter, more cost-effective business growth and better, more personalized customer experiences. 

There’s a lot of movement in the economy right now, and it’s rendering traditional targeting strategies less effective. 

In simple terms, the economy is splitting into a K-shape, with financially thriving and struggling populations rising and clustering toward opposite ends of the economic spectrum, effectively narrowing the traditional middle class. As a result of this polarization, aggregate metrics, such as standard financial indicators, are becoming less accurate, making the "average consumer" a less meaningful concept. 

• Higher-income households have increased by 32% over the past two years. Though they typically represent just 10% of the U.S. population, they’re characterized by strong asset growth, high credit stability, and resilient spending. Wage growth in this segment outpaces all others.  

• Lower-income households have also increased by 11% over the past two years. Representing roughly 20% of the population, this group faces mounting financial pressure, with high debt burdens, limited savings, and declining real income for those earning less than $42,500.

• Between the high- and low-income segments lies a shrinking middle class, down 6% in two years. These consumers are steadily pivoting—either trending up, with improving credit and growing wealth and assets, or trending down, with rising debt and reduced spending capacity. 

For marketers and their digital agency partners who rely solely on standard segmentation measures, this is a wake-up call. The future belongs to organizations that stop asking “how is the average doing?” and start using more granular segmentation and alternative data sources to find the consumers that averages miss. 

The limitations of standard segmentation data don’t stop at outdated averages. Traditional targeting inputs, such as modeled demographic data, often rely on survey data that’s incomplete and infrequently updated. This leads to imprecise segmentation and wasted marketing dollars. 

A more effective approach starts with real-world behavior. 

Spending Insights from Equifax provides visibility into how consumers are actually allocating their money. Built using real transactional data that’s anonymized and aggregated for privacy, Spending Insights reveals recent household spending behaviors across 10 key categories spanning travel, dining, insurance, home improvement, and overall spending. 

Beyond category-level visibility, Spending Insights captures spending levels, recent activity, and frequency, and can be matched at the ZIP+4 level for more precise segmentation. 

With this level of deeper insight and clarity, marketers and agencies can act on what consumers are doing in real life. They will better understand exactly how and where households within specific income brackets are spending—or not spending—and can use those differentiated insights to: 

• Unlock new revenue opportunities by targeting high-potential prospects based on actual spending behaviors, not just demographics. 

• Drive increased spending with existing customers by tailoring offers to categories where they show a high propensity to spend.

• Preserve marketing dollars by filtering credit audiences prior to prescreening to efficiently target high-value prospects. 

• Deliver better consumer experiences with tailored offers that align with and support their real-life spending activities. 

Knowing that every marketing strategy is unique, Spending Insights is designed to seamlessly support both offline and digital marketing environments, helping to ensure consistent targeting and measurable performance across channels.  

• For offline programs, the Spending Insights Index allows marketers to append ZIP+4-level scores to their files, providing a flexible, scalable way to incorporate transaction-based insights into direct marketing campaigns. Scores range from 1 to 100 (with 1 being the lowest and 100 being the highest) and include non-FCRA measures for level of spend, recent spend activity, and spend frequency across 10 spending categories. 

• For digital programs, Spending Insights Digital Targeting Segments offers even deeper intelligence. By combining transaction data with Affluence Index data from Equifax, which measures and ranks households by their estimated capacity to spend, save, or invest, marketers can identify and target high-spending audiences, segmented into “affluent high spender” and “mass market high spender” groups. 

• Multiple delivery options ensure marketers and digital agencies can access Spending Insights via channels that best align with their program needs. This includes batch files and list appends for offline campaigns, or connectivity through the Equifax Ignite® analytics environment, API, or cloud data platforms such as AWS and Snowflake. For online programs, access these insights via leading digital media platforms. 

In today’s volatile, fast-moving economy, consumer spending is shifting across high- and low-income segments, creating new high-value targeting profiles in the process. Marketers and digital agencies risk missing these critical pivots if they continue to rely on standard targeting data, potentially wasting precious marketing dollars on audiences who lack both the interest and ability to spend. 

Integrating Spending Insights and other household financial measures into existing profiling strategies can help deliver more precise, current, and targeted profiles that are grounded in real-world behaviors. It’s a small but strategic adjustment that can unlock new revenue opportunities, strengthen customer relationships, improve marketing ROI, and deliver measurable performance gains in any economic environment.  

Explore why and how consumer economic profiles are shifting and what it means for marketers and digital agencies. 

Learn how marketers can identify high-potential prospects based on actual spending behaviors.