As more consumer companies prepare to report third-quarter earnings, signs of a “K-shaped” economy emerge. Wealthier Americans are spending more, while lower-income Americans pare back due to rising inflation. The Fed has cut interest rates for the second time, as the government shutdown continues.

Companies like Yum Brands, McDonald’s, and Chipotle are reporting lower spending from lower-income consumers. Coca-Cola and Procter & Gamble report growth driven by pricier products for wealthier customers. Companies like Hilton see revenue drops in affordable brands, while luxury offerings perform well.

Consumers are diverging in spending behaviors, with wealthier Americans benefiting from stock market rallies and rising home values. Companies across various sectors are reporting similar trends of lower-income consumers spending less frequently. This “two-tier economy” trend extends to autos, with new vehicle prices setting records and repossessions rising.

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1. Apple announces a new line of iPhones, including the iPhone 13 and 13 Mini, with improved cameras and larger storage options.

2. The Dow Jones Industrial Average closes at a record high of 35,000 points, driven by strong corporate earnings and economic recovery.

3. Tesla reports record quarterly profits, exceeding analyst expectations and projecting strong growth in electric vehicle sales.

4. The Federal Reserve signals a potential interest rate hike in 2022, citing concerns about inflation and economic overheating.

5. Amazon faces backlash for its treatment of warehouse workers, with reports of harsh working conditions and low wages sparking calls for improved labor practices.: Third-quarter earnings are indicating a divided economy