Sep 4, 2026 · 10 min · 6 segments
In this episode, we discuss how With resilience concentrated among wealthier households, investors should prioritize quality and structure across consumer-linked ABF investments. The discussion and…
Not all U.S. consumers are experiencing today's economy the same way.
Wealthier households continue to benefit from rising asset prices and solid earnings growth, while lower-income families are still absorbing the effects of years of elevated costs and tighter lending standards.
For investors navigating consumer-related credit and other household-linked investments, particularly within asset-based finance, ABF, this uneven economic backdrop, and how it's evolving, matters.
Today's economic landscape has led us to favor select higher-quality investments backed by consumers with strong balance sheets over subprime exposures and other areas of potential weakness.
ABF, a subset of private lending where investments are backed by specific collateral, also extends beyond consumer-related sectors with other areas that can help investors diversify and mitigate consumer-specific risks.
a familiar divide but with new wrinkles.
The idea of a K-shaped or two-speed economy where higher-income households pull ahead while lower-income households struggle to keep pace has defined much of the post-pandemic expansion.
But the latest data suggest the story is becoming more nuanced.
Higher income households overall continue to benefit from the factors that have supported resilience throughout this cycle.
Strong equity markets, accumulated wealth, home price appreciation, and healthy balance sheets.
Household net worth as a percentage of disposable personal income is near the highest levels on record.
Wealthier households still account for a disproportionate share of consumption growth and remain an important pillar of overall economic strength.
Meanwhile, the lower half of the income distribution remains pressured, although it is no longer deteriorating uniformly.
Recent private sector payroll and deposit account data suggest wage growth among lower-income earners has accelerated somewhat over the past year, narrowing a gap that had developed with higher earners.
At the same time, employment gains have picked up in select lower-wage industries, including segments benefiting from the surge in AI-related infrastructure investment.
The result is an economy that remains bifurcated, but perhaps less cleanly than before.
Rather than a simple divide between strong and weak consumers, the labor market increasingly appears characterized by pockets of strength alongside pockets of softness.
Overall hiring remains subdued by historical standards, yet workers in certain industries continue to enjoy solid wage gains and employment opportunities.
That creates an unusual dynamic.
Lower-income households are benefiting from some improvement in labor income, but many continue to face the cumulative effects of several years of elevated prices, depleted excess savings, and tighter credit conditions.
Higher-income households, meanwhile, remain financially secure, but may be more exposed to emerging risks associated with AI-driven disruption in white-collar employment.
Thus far, labor market disruption has been concentrated in entry-level professional and technology-oriented occupations, while job growth in specialty trade construction has accelerated.
Not all U.S. consumers are experiencing today's economy the same way.
Wealthier households continue to benefit from rising asset prices and solid earnings growth, while lower-income families are still absorbing the effects of years of elevated costs and tighter lending standards.
For investors navigating consumer-related credit and other household-linked investments, particularly within asset-based finance, ABF, this uneven economic backdrop, and how it's evolving, matters.
Today's economic landscape has led us to favor select higher-quality investments backed by consumers with strong balance sheets over subprime exposures and other areas of potential weakness.
ABF, a subset of private lending where investments are backed by specific collateral, also extends beyond consumer-related sectors with other areas that can help investors diversify and mitigate consumer-specific risks.
a familiar divide but with new wrinkles.
The idea of a K-shaped or two-speed economy where higher-income households pull ahead while lower-income households struggle to keep pace has defined much of the post-pandemic expansion.
But the latest data suggest the story is becoming more nuanced.
Higher income households overall continue to benefit from the factors that have supported resilience throughout this cycle.
Strong equity markets, accumulated wealth, home price appreciation, and healthy balance sheets.
Household net worth as a percentage of disposable personal income is near the highest levels on record.
Wealthier households still account for a disproportionate share of consumption growth and remain an important pillar of overall economic strength.
Meanwhile, the lower half of the income distribution remains pressured, although it is no longer deteriorating uniformly.
Recent private sector payroll and deposit account data suggest wage growth among lower-income earners has accelerated somewhat over the past year, narrowing a gap that had developed with higher earners.
At the same time, employment gains have picked up in select lower-wage industries, including segments benefiting from the surge in AI-related infrastructure investment.
The result is an economy that remains bifurcated, but perhaps less cleanly than before.
Rather than a simple divide between strong and weak consumers, the labor market increasingly appears characterized by pockets of strength alongside pockets of softness.
Overall hiring remains subdued by historical standards, yet workers in certain industries continue to enjoy solid wage gains and employment opportunities.
That creates an unusual dynamic.
Lower-income households are benefiting from some improvement in labor income, but many continue to face the cumulative effects of several years of elevated prices, depleted excess savings, and tighter credit conditions.
Higher-income households, meanwhile, remain financially secure, but may be more exposed to emerging risks associated with AI-driven disruption in white-collar employment.
Thus far, labor market disruption has been concentrated in entry-level professional and technology-oriented occupations, while job growth in specialty trade construction has accelerated.
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