NEW YORK — Black Friday 2024 shattered records with $10.8 billion in online sales, a 10.2 percent increase from last year, but the shopping bonanza masked a troubling reality as affluent Americans spent freely while lower-income households pulled back, highlighting the country's increasingly K-shaped economic recovery.

Online transactions surged during the holiday weekend, with 87.3 million Americans shopping online and 81.7 million visiting physical stores. Yet spending patterns revealed stark divides. Bank of America Institute data shows spending by lower-income households grew just 0.6 percent in September compared with 2.6 percent for higher-income consumers. The divergence reflects what Federal Reserve Chair Jerome Powell describes as a bifurcated economy, where prosperity concentrates at the top while middle and lower-income families struggle with persistent inflation and weakening job prospects.

Record Sales Hide Unequal Recovery

Global spending reached $74.4 billion during Black Friday's 24-hour period, up 5 percent from a year ago, with mobile shopping accounting for 69 percent of purchases. American shoppers embraced buy now, pay later services in unprecedented numbers, spending $686.3 million using BNPL for online purchases, an 8.8 percent increase compared to last year.

Consumer spend was up 4 percent overall, with average order values increasing 3 percent year-over-year. Nearly every product category posted triple-digit sales growth, though slightly lower than 2023 levels. Toys led the surge with prices slashed more than 27 percent, followed by apparel and accessories.

However, aggregate figures obscure the reality that wealth concentration drives current consumption patterns. The top 10 percent of households by income now account for approximately half of all spending in the U.S. economy, up from 44.6 percent in 2019 and 35 percent in the early 1990s.

The K-Shaped Economy Takes Hold

Economists use the term K-shaped to describe divergent economic trajectories, where one arm points upward for the wealthy while the other slopes downward for everyone else. The pattern has intensified since the pandemic as asset-owning households benefited from stock market gains and real estate appreciation while wage earners faced inflation and stagnant purchasing power.

Morgan Stanley Wealth Management Chief Investment Officer Lisa Shalett notes that the top 40 percent of households by income account for approximately 60 percent of all spending, and those households control nearly 85 percent of America's wealth, two-thirds of which is directly tied to the stock market, which has climbed more than 90 percent in three years.

Corporate earnings calls repeatedly reference this divide. Chipotle CEO Scott Boatwright said the restaurant chain had seen the divide among its customers deepen just in recent months, with lower-income customers pulling back on frequency of restaurant visits. Coca-Cola's chief operating officer noted the company continued to see divergency in spending between income groups, with pressure on middle- and low-income consumers still present.

Luxury Spending Surges While Basics Strain Budgets

Spending on U.S. luxury fashion was up 8 percent year-over-year in October, according to Bank of America data, another sign that wealthier households are driving overall spending growth. High-end travel bookings jumped 38 percent year-over-year for fall 2024, while premium hotel suites, business class flights and luxury experiences continued selling strongly.

The average price paid for a new car recently surpassed $50,000 for the first time, fueled by luxury buyers with access to favorable financing. Meanwhile, affordable vehicles under $20,000 have largely vanished from the market, forcing budget-conscious consumers into the used car market or keeping older vehicles longer.

For lower-income households, the picture looks dramatically different. Grocery prices posted their fastest monthly increase in nearly three years. More consumers are using buy now, pay later services even for supermarket purchases, a sign of financial stress. Food pantry usage has increased markedly as families struggle to afford basic necessities.

Structural Factors Drive Widening Gap

Multiple structural factors have accelerated wealth concentration. The S&P 500's gains generated $5.8 trillion in household financial asset increases in the second quarter alone, primarily benefiting the 87 percent of households earning over $100,000 who own stocks. Only 28 percent of households earning below $50,000 own stocks, creating vastly different exposure to asset appreciation.

Federal Reserve data shows the top 10 percent now control 67 percent of total wealth, up from 61 percent in 1989. The pandemic accelerated these trends as remote-capable workers maintained employment and saw home values surge, while service workers faced layoffs and limited wage gains.

Interest rate policies designed to combat inflation have reinforced the divide. Wealthy households weathered the Fed's historic tightening cycle thanks to years of asset appreciation, while lower-income households faced higher mortgage rates and shrinking credit availability just as inflation eroded purchasing power.

Retailers Adapt to Two-Tier Market

Major retailers have adjusted strategies to address the bifurcated consumer base. Some companies are cutting package sizes and prices on lower-end brands while seeing growth in premium offerings. Others focus marketing efforts on higher-income segments that demonstrate spending resilience.

Jewelry and accessories saw the largest increase in web traffic from Black Friday 2023 to 2024 at 23.8 percent. Electronics and apparel remained top categories, but within those segments, premium items drove growth while budget options lagged.

Mobile shopping played an increasingly central role, with 54.47 percent of holiday season sales coming from mobile phones. Buy now, pay later usage highlights financial strain, with the payment method reaching $18.2 billion for the full 2024 holiday season, a 9.6 percent increase from 2023.

Job Market Weakness Compounds Divide

Labor market conditions have contributed to the K-shaped pattern. While unemployment remains relatively low at 4.2 percent, hiring has slowed substantially. A low-fire, low-hire labor market means those with jobs feel secure, but new entrants, particularly Gen Z workers, struggle to find employment as firms contract and AI begins displacing entry-level positions.

Hourly pay growth has also reversed pandemic-era patterns. Wage increases now favor the highest earners after several years where the lowest-paid workers saw the strongest gains. This shift further widens the consumption gap between income cohorts.

Companies announced 153,000 job cuts in October, the highest October total since 2003 according to Challenger Gray & Christmas data. Tech layoffs have dominated headlines, but weakness extends across sectors serving middle-income consumers.

Risks Mount From Concentration

The concentration of spending among wealthy households creates economic vulnerabilities. If stock market confidence falters or asset prices decline, the households driving half of all consumption could pull back simultaneously, triggering rapid demand destruction.

Moody's Analytics Chief Economist Mark Zandi warns that as long as the wealthy keep spending, the economy should avoid recession, but if they turn more cautious for any reason, the economy faces significant problems. The risk resembles a table balancing on three legs rather than four, stable in good times but increasingly precarious as conditions shift.

Concerns about an artificial intelligence bubble add to anxieties about an unbalanced economy. Harvard economist Jason Furman estimates more than 90 percent of demand growth in the first half of 2024 came from just two GDP categories: information processing equipment and software. Such narrow growth engines prove fragile.

Political and Social Implications

The wealth divide carries consequences beyond economics. Just 25 percent of Americans believe they have a good chance of improving their standard of living, a record low according to survey data. Rising inequality historically precedes political instability and populist movements that create policy uncertainty disruptive to markets.

Federal Reserve research demonstrates that extreme wealth inequality increases household mortgage leverage and corporate debt levels, creating financial stability vulnerabilities. The concentration of 89 percent of stock wealth among the top 10 percent means market corrections would disproportionately impact the households sustaining current consumption.

Some economists argue the K-shaped characterization overstates the problem. Domenic White of Absolute Strategy Research contends Bureau of Labor Statistics estimates show more stable spending distribution, and wealthy households' higher propensity to save argues for slower rather than faster growth as wealth concentrates.

Others note lower-income households are investing in stocks at higher rates than a decade ago. JPMorganChase Institute data shows the share of below-median income households transferring funds to investment accounts in May 2025 was five times higher than the average between 2010 and 2015.

Uncertain Holiday Season

The 2024 holiday shopping season generated $241.4 billion in online spending from November through December, up 8.7 percent from 2023. Cyber Monday followed Black Friday with $13.3 billion in sales. Early forecasts for 2025 point to continued expansion at a more measured pace, with total holiday retail sales potentially exceeding $1 trillion for the first time.

Whether the K-shaped pattern persists depends on multiple factors. A sustained stock market rally could extend wealthy households' spending capacity. Conversely, market volatility or weakening AI enthusiasm could trigger pullbacks. Labor market conditions will prove critical, as further job losses would compound stress on lower-income households while potentially shaking confidence even among higher earners.

For now, Black Friday's record results demonstrate that aggregate economic growth continues despite deepening inequality. The critical question is not whether the economy expands, but whether growth shared broadly enough to prove sustainable or whether concentration at the top creates conditions for future instability.