Reference News Network, October 30 report: The U.S. Consumer News and Business Channel website published an article titled "The U.S. Economy is Beginning to Show a 'K-shaped' Divergence" on October 23. The author is Leela Niranjan, the content is translated as follows:

Amid growing concerns about a recession, government shutdowns, and tariff uncertainties, American consumers' spending behavior is increasingly diverging.

The wealthy are still actively spending to demonstrate their purchasing power, while low-income groups are beginning to cut back on expenses, a phenomenon often described as a "K-shaped" economy. The consumer price index report, which was supposed to be released last Friday, may further reveal the economic pressures faced by the broader population in the United States.

The consumer price index report primarily measures changes in the prices of various goods and services. Due to the government shutdown, this report, originally scheduled to be released nine days ago, has been postponed. Although the report will not include data related to the government shutdown, it will provide critical inflation reference for the U.S. Social Security Administration, as November 1 is the deadline for calculating annual cost-of-living adjustments.

Mid- and low-income consumers are most affected by rising prices of everyday necessities such as groceries and gasoline. At the same time, affluent investors benefit from stock market gains and rising house prices. According to the latest cost-of-living survey by JPMorgan, income level is an important factor leading to differing views among Americans about the current economic situation.

Here are several key areas where economic divergence is beginning to show:

Food and Beverage Industry

Coca-Cola's business performance is reflecting this consumption divergence, as the company is often seen as a barometer of consumer financial health.

Coca-Cola's CEO James Quincey said in an interview with the Consumer News and Business Channel's "Wall Street Live" program on Tuesday that premium products targeting high-income groups, such as Topo Chico sparkling water and Fairlife protein shakes, are driving the company's sales growth.

At the same time, Coca-Cola found that demand for its products has increased in two types of channels. One is discount stores catering to low-income groups seeking deals, and the other is upscale venues, such as casual dining restaurants and amusement parks, catering to affluent customers.

McDonald's CEO Chris Kempczinski told the Consumer News and Business Channel's "Financial Forum" program in early September that McDonald's expansion of its value menu is aimed at addressing this divided consumer environment. He referred to this environment as a "two-tier economy."

Kempczinski noted that although the company sees good spending conditions among high-income consumers, the situation for mid- and low-income diners is "completely different."

He said last month: "The number of visits by low-income consumers has dropped by double digits, because they either choose to skip a meal or cook at home."

According to Adam Lemer, CFO of Chipotle Mexican Grill, the company is also facing similar situations.

Lemer told Reuters in July: "Some consumer groups, especially low-income ones, are currently feeling economic pressure. This is a factor we must consider when developing our pricing strategies in the future."

Automotive and Aviation Industries

Data from Kelley Blue Book, part of Cox Automotive Consulting, showed that the average price of new cars in the United States broke through $50,000 for the first time last month.

While new car prices hit record highs, the default rate and repossession rate for car loans have also risen, with those having credit scores below 620 being particularly affected.

Erin Keating, senior analyst at Cox Automotive Consulting, stated in a statement last week: "The current car market is mainly supported by affluent families who can access funding support and favorable loan rates, thus supporting the luxury car market."

Airlines have been experimenting with premium services for years, and in recent months, the demand for expensive tickets has shown particularly strong growth.

Delta Air Lines said earlier this month that revenue from its premium services is expected to exceed that of economy class next year. The airline's CEO Ed Bastian said there is no sign yet that demand for spacious and more expensive premium seats is slowing down.

Hotel Industry

However, despite signs of a "K-shaped" economy, some believe this division will not last long.

Christopher Nassetta, CEO of Hilton Hotels, told the Consumer News and Business Channel last month that he noticed the phenomenon of market segmentation, but expects this pattern will not last for long, partly because he believes inflation and interest rates will decline.

Nassetta said: "In my personal opinion, we will see significant changes in these economic dynamics by the fourth quarter of this year, especially next year, meaning this division will not continue. This does not mean I think the premium market will deteriorate, I just think the mid-range and lower-end markets will rebound."

Hilton Hotels reported that the revenue of its economy brands, such as Hampton by Hilton and Home2 Suites by Hilton, has declined.

At the same time, Nassetta told investors during the earnings call that the revenue of its luxury brands has performed exceptionally well and remains the focus of Hilton's future development direction. (Translated by Yang Ke)

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